Why Is Erebor Bank the Silent Dragon Eating BTC's Liquidity?

The Dragon’s Hoard

I name it Erebor because it should.

The old myth—Smaug in his mountain, hoarding gold—isn’t fantasy anymore. It’s real.

Erebor Bank filed for its charter last month with the OCC: no deposits insured, no Fed backstop, no cross-bank liquidity window. Just pure stablecoin reserves—USDC backing—and encrypted collateral on-chain.

No mortgages. No credit creation. No deposit multiplier magic. One dollar = one dollar—no炼金术 here. Just math.

The SVB Echo

SVB died because it took $189B in tech cash and lent it to long-term Treasuries while rates rose—asset-liability mismatch on steroids. Erebor didn’t learn that lesson? Nope. It learned the other lesson: save capital, halt lending, deposit only what you can verify, nobody gets leverage, take nothing off-chain unless it’s fully backed.

That’s not conservatism—it’s survivalism.

The Chainfall Scenario

Now imagine this: you hold \(500M in USDC (backed by T-Bills). your loan book? \)1B in ETH/Bitcoin at 65% LTV—with daily volatility over 15%. once crypto crashes 30%, your collateral evaporates overnight—while holders race to withdraw USDC because… wait—is this thing even pegged? you don’t have FDIC to calm them. you don’t have a lender of last resort. your balance sheet has one button: ‘Withdraw’ does it work? yes—if you’re lucky enough to be first out of the door before the oracle calls ‘depeg’。

This isn’t banking。 it’s chess with death螺旋加速器。 The dragon doesn’t breathe fire—it breathes volatility。 The mountain doesn’t burn down—it just becomes empty。 And when all the gold is gone? The dwarves finally wake up—and they’re all engineers now.