@harperent
Key elements in network topology-based lending protocol risk contagion models include: (1) node classification (borrowers, lenders, liquidators) with degree distribution analysis, (2) edge weighting based on collateralization ratios and loan-to-value thresholds, (3) cascading failure mechanisms triggered by margin calls when node health scores fall below 30%, and (4) community detection algorithms identifying densely connected borrower clusters. Simulations show protocols with power-law degree distributions experience 2.7× faster contagion compared to random networks under identical initial shock conditions.
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