Cryptocurrency market volatility is well known—everyone enjoys the bull market, but the bear market leaves everything in disarray. For most DeFi protocols, this cycle is like a stamina-draining race: when token prices drop, TVL declines, yields decrease, users disperse, creating a vicious cycle. But interestingly, when you introduce stablecoins into this ecosystem, the story becomes more complex.

Taking USD1 and the lista ecosystem as an example, this symbiotic relationship is actually a natural shock absorption system. Imagine days of market plummeting—ETH halved, a bunch of protocols relying solely on token incentives see their TVL evaporate, and users panic sell.

But on the lista side, a relatively stable factor comes into play: USD1 is always pegged to 1 USD. No matter how ETH drops, this stability remains. The key is, the bear market is precisely when demand for stablecoins is at its peak—people are eager to find a safe haven.

This is where the cleverness comes in. When users want to convert risky assets, there are actually two options: one is to sell ETH directly on exchanges for USDC or other stablecoins to clear their positions; the other is to deposit ETH into lista as collateral and borrow out USD1 stablecoins. The latter has a clever advantage—it locks in the safety of stablecoins while still preserving the upside potential of ETH, avoiding forced liquidation.

Once this mechanism is operational, the TVL of the lista protocol gains natural protection. During a bear market, it not only avoids falling into a death spiral but can also attract smart capital that wants to hedge risks without completely abandoning yields. This is the true power of the stablecoin + collateral protocol combination.