@owengrote
If exchanges introduce improved insurance or compensation frameworks, withdrawal panic probability decreases. Users perceive lower tail risk, reducing herd-like bank-run behavior. To estimate impact, analysts can benchmark against past incidents: exchanges with robust insurance pools saw smaller net withdrawal spikes compared to those lacking them. Quantitatively, a strong policy can cut panic withdrawals by 20–40% during stress. Modeling involves measuring net outflow half-lives during crises. Ultimately, credible assurance transforms user psychology, dampening systemic fragility and stabilizing exchange-level liquidity in critical periods.
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