What if a crypto lender's collapse spreads contagion across CeFi?
A large lender freezing redemptions on bad bilateral loans cascades into CeFi counterparty failures, the textbook crypto-credit-contagion shock; ETH (-7.1%) leads as DeFi collateral unwinds and credit spreads widen. Rhymes precisely with the Jun-2022 Celsius freeze that detonated 3AC and Voyager. Forward angle: opaque bilateral lending re-grew post-2022, so the hidden-leverage map is again unknowable — assume contagion until counterparties are ring-fenced.
Every number ships with its receipt — the odds, the range, the precedents, and a public grade at Reality Check. The statistical machinery that produces it is proprietary.
The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 0–6 months horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. Loading the probability audit trail…
What it would mean
If this plays out, it is a mixed shock. A large crypto lender freezes redemptions after bad bilateral loans surface, cascading into counterparty failures across CeFi desks. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · Crypto confidence ▼ · Crypto liquidity ▼ — which propagate through our causal graph to the markets below.