Simulations paper
Empirical validation of the protocol's properties across capacity dynamics, cascade dynamics, TWAP manipulation, and bad-debt analysis.
Topics
Capacity dynamics
Simulation of the cap function over many operations confirms:
- O(√n) Sybil scaling matches the theory.
- A patient attacker with capital retains ~48.6% share after 60 weeks of repeated operations.
- Honest small users are not artificially blocked — the cap floor and √(n+2) divisor combine to give meaningful first-deposit access.
Cascade dynamics
Simulation of 1,000 borrowers under price shocks across different lock fractions:
| Shock | 0% locked | 25% | 50% | 75% | 100% |
|---|---|---|---|---|---|
| 10% | 8.6% | 8.2% | 7.8% | 7.8% | 7.4% |
| 25% | 85.7% | 55.8% | 37.1% | 33.3% | 29.4% |
| 30% | 99.1% | 84.9% | 61.2% | 47.9% | 38.6% |
Up to 80% reduction in liquidation count at full lock adoption under stress shocks.
TWAP manipulation
60 Foundry-based scenarios test single-block, sandwich, and sustained manipulation. Two-tick immunity is verified: no single-block manipulation can affect the reported price.
Bad-debt Monte Carlo
10,000 paths under Merton jump-diffusion confirm:
- At default LTV (66.67%) with 50% buffer: bad debt at 99% CVaR = 0.02% of pool.
- At conservative floor (33% LTV, 200% buffer): zero bad debt for crashes up to 50%.
Where to find the paper
- PDF:
banq-sim.pdf(latest release) - Unified bundle:
banq-all.pdf— this paper is Part IV (Simulations & Risk Analysis).
Where to go next
- Cascade protection — what the simulations measure
- Bad debt scenarios — risk implications
- Manipulation resistance — TWAP results