Bullish strategies that seem foolproof in a bull market can collapse instantly during deleveraging.

I've seen too many people ruin the collateral-minting cycle during the BNB bull market. Borrow BNB to get lisUSD, then use lisUSD to collateralize and generate slisBNB, and continue to collateralize slisBNB to produce more lisUSD... This positive feedback loop is like an infinite money printer, with TVL soaring and on-paper profits looking explosive. Many people get lost in this process, forgetting when the high leverage is most vulnerable.

The answer is: the exact moment the market reverses.

When BNB starts to decline and everyone tries to close their positions simultaneously, you'll find that the previously spacious liquidity channel has turned into a needle. The sell orders for lisUSD in the secondary market disappear completely—because everyone is buying lisUSD to pay off debts, pushing the price artificially up to 1.02, 1.05, or even more ridiculous numbers. You need to spend more money to buy these debt tokens. Meanwhile, redeeming collateral requires a waiting period, so you can't quickly raise cash by selling BNB.

This is the beginning of hell. You hold real BNB assets, which are theoretically valuable, but you are ruthlessly liquidated by the system because you can't afford the premium lisUSD. From the exchange's perspective, this is bad debt; from your perspective, it's outright being harvested.

Leverage makes you a god in this ecosystem; deleveraging turns you into a slave. If your position management doesn't include a plan for "when to run," then every bit of interest you earn now is ultimately just margin working for the system.

Disclaimer: This content is personal analysis only and for reference purposes; it does not constitute investment advice.