I. Flow (Flow)

*What is credit risk?
Credit risk is the most easily overlooked, although it occurs less frequently, the damage caused when problems do arise is the greatest. When key players such as the project, counterparty, or trading platform collapse, it creates credit risk.
For example, if the exchange we frequently use suddenly goes bankrupt, or if the pledged liquidity pool is hacked, leading to liquidity exhaustion, or if management embezzles funds, these are all low-probability events under monitoring, but once they happen, they can easily cause the entire system to collapse.
In the market, all assets have varying levels of risk. Using common asset types to categorize, the risk from low to high includes U.S. Treasury bonds, S&P 500, real estate, acquisitions, and venture capital.
The more risk we take on, the higher the return we hope to receive, which is called risk premium. For example, in real estate investment, we know that its risk is much higher than U.S. Treasury bonds, but when we choose to take this risk, we expect to earn a higher return than bonds.
However, even assets with high trustworthiness have their risks. For example, during the U.S. subprime mortgage crisis, most of the indicator assets that experienced problems were considered high-value assets by Wall Street’s most reputable institutions.
In the crypto market, the most critical credit risks are BTC and ETH. What’s the difference between these two? Actually, as the crypto market has developed, the correlation between BTC and ETH has become quite high, approximately at the ETH/BTC ratio around