Here are some suggestions for Binance—

When leverage is pushed to the limit and depth evaporates in milliseconds, violent price fluctuations are merely a symptom; the real cause is the "overheating" of the entire system.

The market collapses at that moment not because someone made a mistake, nor because anyone acted maliciously, but because all mechanisms are "functioning normally."

However, this is precisely the most terrifying aspect.

Binance has borne the brunt of the entire system's leverage flood, exposing the truth of the industry:

The market does not collapse due to weakness, but rather because, under an "overly strong" leverage structure, it finally touches its own limits!

From the perspective of data and microstructure:

The Portfolio Margin system allows users to use various assets (USDE, WBETH, BNSOL, etc.) as collateral; these assets influence each other within the same system, and when the price of one collateral crashes, it triggers a cascade liquidation.

The system overly trusts the assumption that "liquidity is always present," but when LPs suddenly withdraw, the entire collateral system collapses in an instant.

This means that Binance's system design has allowed for too many levels of multi-layer leverage interlock.

This structure is extremely efficient during stable periods, but in extreme environments, it mechanically amplifies localized risks.

Therefore, I believe Binance's responsibility lies in:

Not designing sufficient circuit-breaker mechanisms for "liquidity collapse scenarios," allowing the leverage system to self-destruct during normal operations.

Directions for technical and mechanism improvements If Binance truly wants to learn from this incident, the following directions are crucial:

1️⃣ Limit Cross-Margin Containment Risk:

Portfolio Margin is Binance's biggest structural innovation in recent years, but it is also the largest source of risk.

Improvement suggestions:

Gradually isolate high-volatility assets (Altcoins) from core collateral assets (BTC, ETH, USDT);

Implement higher risk weight coefficients for "stablecoin + altcoin" combinations; introduce dynamic haircut mechanisms to automatically increase collateral discounts for high-volatility assets during extreme market conditions.

2️⃣ Improve liquidation logic and transparency;

During extreme volatility, Binance's liquidation system behaves "too mechanically":

The liquidation trigger range is too narrow; the ADL (Automatic Deleveraging) algorithm prioritizes closing hedge positions, leading to more severe market imbalance.

Improvement suggestions:

Implement a tiered liquidation model, first freezing the additional margin range, then reducing positions in batches; introduce a public liquidation monitoring panel to allow market participants to see the overall network leverage distribution in real-time; for extreme events, activate latency-aware protection to mitigate cascading slippage.

3️⃣ Enhance liquidity contingency plans in extreme situations:

During a sudden drop in liquidity, Binance's bid-ask spread soared by 200bps.

This indicates that LPs (market makers) collectively went offline during systemic volatility.

Suggestions:

Sign "Liquidity Commitment Agreements" with core market makers, requiring them to maintain minimum order book depth during extreme market conditions;

Establish an internal Market Stability Fund, similar to traditional market circuit-breakers;

Allow for the temporary shutdown of the cross-margin mechanism during system crashes, retaining only the main collateral asset trading.

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