In case the negative funding payments wipe out all of the staked USDL and all of the treasury, the collateral backing USDL would start being affected. The worst drawdown for a basis trading strategy on Bitmex between January 2018 and May 2021 was 6% (compared to a 81% max drawdown over the same time period for BTC).
In a hypothetical worst case scenario where:
+ Lemma starts issuing USDL at the beginning of that long period of negative funding payments
+ There are no assets in the basis trading vault
Then, at the very end of the drawdown, USDL would be backed by 94% of its initial collateral. In this scenario, a user would only be unable to exchange a USDL for 1 USD worth of cryptocurrency if more than 94% of all USDL in circulation was redeemed beforehand.