Bank runs are self correcting because of the automatic increase of borrowing rates, and if the borrower lets the position go under, the liquidator liquidates the position. The worst that could happen is a temporary period of not being able to convert underlying assets .
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Raising interest rates does not stop bank runs.
You literally do not know anything about this, do you?
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Raising interest rates will cause borrow positions, if not repaid to go under the collateral threshold, and then a liquidator can liquidate it for 8% profit.
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If your idea of a bank run is an event where ctoken holders in mass try to redeem for underlying assets , a bank run will result in a temporary period of not being able to redeem, and through interest rates and liquidation incentives the system will self correct.
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Interest rate rises and liquidation incentives do not stop runs. They amplify them.
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You need to go and study the phenomenon known as "multiple equilibrium", when a system shifts from its steady-state self-correcting equilibrium to disorderly collapse. All the self-correction mechanisms fail in the equilibrium shift.
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Self-correction mechanisms that rely on financial incentives do not work when panicking humans are stampeding for the exit.
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I don’t debate the poor on Twitter, and sorry I don’t have any change on me for her at the moment.
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Oh come on Do, help me convert Frances.
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Got any front end devs wanting to work in an A-tier team building on Terra?
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No, I blocked him for rudeness. As I'm now doing with you.
As a punishment for his trickery, Hades made Sisyphus roll a huge boulder endlessly up a steep hill. The maddening nature of the punishment was reserved for Sisyphus due to his hubristic belief that his cleverness surpassed that of Zeus himself.
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His/her, Zeus/
Shoulda listened while you had the chance, methinks
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