I have intermittently seen market makers come out to speak.
The reason for the historically extreme black swan event on October 11 is likely confirmed.
It also aligns with my previous speculation.
It was caused by the Binance API crashing at 5 AM on October 11.
All market makers were unable to place orders to provide liquidity.
All coins experienced a sharp price drop.
All positions with leverage above 1x went directly to zero.
All other CEX/DEX that used Binance prices as a major weight for contract index prices were greatly affected.
Regulators really need to investigate this!
After a few days, the heat has dissipated, and Binance is still alive.
That’s fucking Crypto.
This also exposes a huge structural risk in the entire industry’s contract market. We must not overly rely on the transaction prices of leading centralized exchanges as index prices or reference quotes. We must consider the prices from on-chain DEXs, even as the main weight.
CEX trading volume leads, but the data may be inflated.
In a normal market, CEX has a deep order book advantage, but that is illusory. In the event of high volatility and black swan events, market makers can withdraw liquidity in less than 1 second.
On-chain, there can also be situations where LPs withdraw liquidity, but in mature on-chain DeFi ecosystems like EVM, SOL, SUI, the MEV bot competition is already very saturated. Once price discrepancies appear between different pools, MEV Bots will immediately eliminate the discrepancies, maintaining a transparent, fair, and stable on-chain market price.
Centralized servers have downtime risks, like the incident on October 11. It’s uncertain if this is the first time an API has crashed, but it can be confirmed that any occurrence of such a situation, especially in exchanges with pricing power, will be a systemic blow to the industry.
There is no way to rule out the possibility of centralized exchanges acting maliciously, and the data is extremely opaque. Now, a week has passed, and Binance has not issued any announcement explaining the specific reasons or disclosing the real liquidation data. ⚠️
Crypto #Binance #Liquidation
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