Cross-Chain Collateral Liquidity Routing Protocols Under Volatile Market Conditions

Abstract

This article investigates a pre-2019 cross-chain collateral routing framework that enables secure multi-hop liquidity transfer across heterogeneous blockchains using HTLC-based atomicity, volatility-aware path scoring, and relay-verified state propagation. Simulation results demonstrate that the proposed architecture maintains high routing success rates in low and moderate volatility regimes, while identifying liquidity-drain thresholds and timelock fragility that emerge under extreme stress. The liquidity saturation patterns in Figure 3 and the stress outcomes in Table 2 confirm that descending timelocks, real-time liquidity evaluation, and adaptive path selection are essential for maintaining collateral integrity in decentralized, multi-chain environments. The findings establish this framework as a robust foundation for early interoperable collateral systems while outlining clear directions for enhancing resilience against volatility-induced failures.