

==============================================================================================
PART 1 — the "80-95%" number: THREE different states, do not conflate them.
==============================================================================================
                 state        backing/claims      withdrawable now            what it is
----------------------------------------------------------------------------------------------
                NORMAL                  100%                  100%fully backed, fully liquid
   BUFFER (deliberate)              105-120%                  100%OVER-collateralized (insurance)
   FREEZE (chain down)                  100%                80-95%fully backed; frozen part ILLIQUID = a passive cushion
    DEATH (coin -> $0)                80-95%                80-95%a HAIRCUT (under) — absorbed by buffer + moneyness

  CLARIFICATION: my earlier "80-95% after a capped death" was the DEATH row — that is BACKING after a
  LOSS (under-collateralized, a haircut), NOT "available for withdrawals" and NOT over-collateralization.
  Your OVER-collateralization intuition is the BUFFER + FREEZE rows: a deliberate buffer (105-120%),
  plus any FROZEN reserve that can never exit — which relative to the shrunken withdrawable claims
  DOES act as extra cushion. So: DEATH = a small under (handled); FREEZE/BUFFER = over (a bonus). Correct,
  once separated — and you are right that TRAPPED settled deposits are not a worry, they are security.


==============================================================================================
PART 2 — the DEPOSIT-side risk you flagged: deposit a DEVALUED coin at PAR → arbitrage drain.
==============================================================================================
  USDC trades at $0.87 on the market. If the basket mints 1 uniform USD per 1 USDC at PAR:

   1. arber deposits 1 USDC (worth $0.87) → receives 1 uniform USD (par)
   2. arber withdraws 1 uniform USD → receives 1 USDT (worth $1.00) on another chain
   => arber profit $0.13 per unit; the BASKET received $0.87 and paid out $1.00 → loses $0.13.
   Repeated, the basket fills with cheap USDC and is drained of good USDT — Gresham's law (report-9).

  "Who pays the difference?" — exactly your question. At PAR-in it is the BASKET (all uniform-USD holders).


==============================================================================================
PART 3 — the fix (yours): ORACLE-PRICED DEPOSIT. Credit market value, not par. No freezing.
==============================================================================================
  Oracle says USDC = $0.87. The system debits/credits the DEPOSIT at market:

   deposit 1 USDC → credit 0.87 uniform USD  (not 1).
   withdraw 0.87 uniform USD → receive 0.87 USDT.  Arber profit: $0.00.  ARBITRAGE KILLED.
   Basket: took $0.87 of value, issued 0.87 claims → 100% backed at market. Neutral. No loss.

  Why this beats FREEZING:
   • Freezing blocks HONEST users too (someone who genuinely wants USDC on BCH can't deposit).
   • Oracle-priced deposit lets EVERYONE transact — at fair value. The depeg is priced, not banned.
   • If USDC later RECOVERS to $1.00, the basket now holds 1 USDC (worth $1) backing 0.87 claims →
     115% backed = the recovery accrues to the basket/holders as OVER-collateralization. Upside, not risk.
  => Freezing is a blunt fallback (use only if no reliable oracle exists); oracle-priced deposit is the tool.


==============================================================================================
PART 4 — the ASYMMETRY (your core insight) + the one honest caveat.
==============================================================================================

 THE ASYMMETRY — inflow risk, not outflow risk:
  • WITHDRAWAL / OUTFLOW side is SAFE. Removing already-settled deposits cannot hurt the basket (value
    already captured at deposit). A chain freezing traps its reserve = a passive cushion, not a loss.
    Settled value on BCH stays. You are right not to worry about the exit side.
  • DEPOSIT / INFLOW side is the ONLY real inflow risk. Accepting a devalued coin at PAR is the leak.
    ONE tool closes it: price the deposit at market (oracle). Everything downstream (swap, withdraw,
    internal use) is then fair by construction.

 THE ONE HONEST CAVEAT — oracle-priced deposit is only as good as the oracle:
  • FRESHNESS is critical. A stale feed still saying USDC=$1.00 during a fast depeg re-opens the exact
    arbitrage. Need a fresh, multi-oracle MEDIAN price per stablecoin (same discipline as the FX desk /
    ADR-0051 freshness bound). A CLTV/age bound + several independent oracles.
  • DISCLOSE the rate at deposit: "USDC is trading at $0.87 — you will receive 0.87 USD." Fair + transparent.
  • Oracle-priced deposit kills the ARBITRAGE. A coin that later DIES after an at-market deposit is a
    separate, bounded event (per-issuer cap + buffer + moneyness, report-9/12) — not this leak.

 NET: withdrawal side = no worry (settled value + frozen cushion). Deposit side = the one leak, closed by
 oracle-priced-at-market deposit (freezing unnecessary). The system stays 100%+ backed and arbitrage-free,
 with the only dependency being a fresh, multi-oracle price feed per stablecoin.

