Why backing is protected by a drawdown limit, not a fixed floor
People expect a floor to be a number. In Assetrix it is a distance from the record, and the difference is the whole point.
What is actually protected
The contract stores the highest backing per token ever reached. The protection level, X, is the admissible drawdown from that record: 61.8 % by default, tightened by vote to 50, 38.2 or 23.6 %. The threshold is the record times one minus X. Backing may approach the threshold; it may not reach it. That is the whole rule.
Why a fraction and not a line
A fixed floor — “backing shall not fall below such-and-such” — freezes the protocol at whatever the number was when it was set. As backing rises, a fixed floor becomes irrelevant; as it falls, a fixed floor becomes a cliff that every participant races to be first past. A drawdown from the record does neither. It follows backing up, so the protection is always about the recent past, and it defines a zone rather than an edge.
How the zone is used
Only one operation can lower backing: closing a position whose entry price is below the current backing. Such a closing may use at most 38.2 % of the headroom above the threshold. The next one, 38.2 % of what remains. After ten, less than one per cent of the original headroom is left. Backing approaches the threshold geometrically and never arrives. A position large enough to matter cannot close at once; it closes over cycles, in the open, with everyone else able to see it coming.
What the default means
A default of 61.8 % sounds lenient. In the simulation it hardly matters for everyday behaviour: when holders close as soon as closing beats redeeming, corrections stay in single digits and never come near the threshold. The level is insurance against a whale — a large position entered far below backing — and the strict setting exists for a community that wants that insurance tighter. Tightening it has a side effect worth knowing: with less headroom, cheap positions can close only in slivers, and their holders tend to redeem instead, which does not dilute anyone.
What it does not protect against
The price of the collateral itself. If the reserve holds a volatile currency, the reserve is worth what that currency is worth, and every threshold above it moves with it. With stablecoins the rule holds as written. The site says so on every page that touches the subject, because it is the one place the arithmetic stops.