Same way you use a credit card basically, they go off how reputable you seem. So blockfi basically decided a bunch of businesses were financially healthy enough to not post collateral. But judging wrong means disaster and that’s what happened with 3AC.
Doesn’t really matter now though since they’re getting acquired by FTX which has a crapload of capital to shore things up.
Seems like FTX and maybe Nexo were the best at managing risk on their balance sheets amongst the firms that had yield products
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