Unchained - The Chopping Block: Inside the $19B+ Perp Crash, ADL Explained, Binance’s USDe/Staked-Token Depeg, and the Hyperliquid Whale Debate

Episode Date: October 14, 2025

Welcome to The Chopping Block — where crypto insiders Haseeb Qureshi, Tom Schmidt, Tarun Chitra, and Robert Leshner chop it up about the latest in crypto. This week, Doug Colkitt, Founder Ambient Finance & Founding Contributor at Fogo, joins us as one of the wildest weekends in crypto history drags us back on air: a record $19B+ in liquidations, gas spiking toward $400, exchange APIs wobbling, and ADL ripping through perps as hedges vanished. We unpack what ADL actually does, why delta-neutral farmers got nuked, and how Binance’s USDe and staked ETH/SOL pegs snapped amid index design and mint/redeem gaps—followed by refunds. We get into HLP vs. LLP (vaults vs. winning traders), the Hyperliquid “whale” short ahead of the tariff tweet, cross-margin reflexivity that torched alts, and why market makers wore outsized pain. Then we zoom out to infra: sequencers, force-inclusion in practice, and the case for on-chain clearing plus real insurance funds before the next Listen to the episode on Apple Podcasts, Spotify, Pods, Fountain, Podcast Addict, Pocket Casts, Amazon Music, or on your favorite podcast platform.   Show highlights 🔹 Record wipeout — $19B+ liquidations, 1.6M traders rekt, gas spiking to ~$400 while major exchanges wobbled. 🔹 ADL, decoded — What happens when perps run out of counterparties; socialized losses, P&L/leverage ranking, and why hedges vanished. 🔹 Delta-neutral nuked — Cross-venue long/short farmers turned naked as ADL picked off one leg first. 🔹 Binance peg breaks — USDe to ~$0.68 on Binance, staked ETH/SOL snapped; refunds >$250M after index/oracle and mint-redeem gaps. 🔹 Flows vs. “attack” — Earn users rushing to USDT + copy-trade momentum likely amplified the depeg more than cunning index games. 🔹 DeFi vs. CeFi — Perp DEX performance broadly comparable; transparency gaps in ADL policies and liquidation mechanics laid bare. 🔹 Vaults vs. traders — HLP vs. LLP outcomes show who platforms chose to protect in tail events—and the retention risks of clipping winners. 🔹 OI collapse — Hyperliquid open interest ~15B → ~6B; cross-margin reflexivity helped nuke alts far worse than BTC. 🔹 Why it felt one-sided — Market-maker/API failures and risk misallocation made typically “safe” actors eat outsized losses. 🔹 The whale short — A massive Hyperliquid short pre-tariff tweet sparks insider-vs-coincidence debate. 🔹 Infra faceplants — Sequencers down, force-inclusion in theory only, docs offline—while base L1s largely kept ticking. 🔹 What to fix — On-chain clearing, real insurance funds, sane ADL ranking, robust mint/redeem, and better index/oracle design before the next shock. Hosts ⭐️Haseeb Qureshi, Managing Partner at Dragonfly ⭐️Robert Leshner, CEO & Co-founder of Superstate⭐️Tarun Chitra, Managing Partner at Robot Ventures⭐️Tom Schmidt, General Partner at Dragonfly    Guest ⭐️ Doug Colkitt, Founder Ambient Finance & Founding Contributor at Fogo    ⁠⁠Disclosures⁠⁠  Timestamps 00:00 Intro 01:11 $19B+ Liquidated 04:35 Personal Experiences & Reactions 08:30 Understanding Auto De-leveraging (ADL) 14:37 Binance & USDe Incident 23:19 DeFi vs CeFi Performance 26:05 Zero-Sum & Greedy Algorithms 34:26 Vaults & Trader Protection 39:43 Market Reactions & Trader Sentiments 44:33 Infrastructure Failures & OI Collapse 46:56 Insider Trading Allegations & Market Manipulation 52:14 Future of Perpetual DEXs Learn more about your ad choices. Visit megaphone.fm/adchoices

How did you experience it? I guess I had a different experience. I actually think it's funny to think of like VCs as like the FEMA showing up after the hurricane type of thing. That's like kind of like, you know, making podcasts and tweet threats about it. I did put on my little red cross. Not a dividend. It's a tale of two fun.

Now your losses are on someone else's balance. Generally speaking, air drops are kind of pointless anyways. I'm an inch trading firms who are very involved. I like that eat is the ultimate. DFI protocols are the antidote to this problem. Hello, everybody. Welcome to Chopin Block. Every couple weeks, the four of us get together

and give the industry insider perspective on the crypto topics of the day. So, Kikintros, we've got Tom, the Defy Maven, and Master of Memes. Hello, everyone. Next to you got Robert, the Crypto Gondasurer and Tsar of Super State. Good morning.

Next, you've got Tarun, the Gigabrain, and Grand Puba at Gondland. Yo. Joining us today, we've got special guest, Doug Colquit, Liquidity Luminary, at Ambien Finance and Fogo. Hello.

And I'm a C of the head hype man at Dragonfly. We are early-stage investors in crypto, but I want to caveat that nothing we say here is investment advice, legal advice, or even life advice. Please see chopping blocks at XYZ for more disclosures. So we were actually planning to take this week off, but unfortunately we were brought back on the job on overtime

because we have just experienced the most wild weekend, potentially in crypto history, the single largest day of liquidations ever. It was an absolutely chaotic weekend. And it all really happened on Friday. So Friday, for those of you who were somehow not paying attention to what's going on in the world. I wasn't paying attention. Trump issued massive threats against China for withholding rare earths from the U.S.

and basically said, we're coming back at you, new round of tariffs. And this time, they're bigger, they're badder than ever. He elicited this threat late on a Friday evening, U.S. time. And this caused markets to immediately crash. and crypto markets crashed much more severely than almost anything else because, of course, crypto could continue trading even as markets closed on Friday evening. So we saw the single largest day in liquidations ever, over $20 billion liquidated. Over 1.6 million crypto traders were liquidated over that time, mostly longs, liquidated

much more so than shorts. Now, these losses, you saw across the entire crypto market caps. So large caps fell about 27% on average. Smaller caps lost 52% on average During the course of the day Peaked a trough, we saw some tokens Completely cratered to basically near zero Adam very notably hit less than a cent on finance

Over one crazy wick Multiple assets went down over 80% And that did later recover in the day But insane levels of volatility That we have almost never seen Rivaling only the COVID crash And the FTX crash. Of course, COVID is much, sorry, crypto is much bigger now

than it ever was during the COVID or FTX crises, making the dollar notional amount that were liquidated in this, in the sell-off, the biggest that we have ever seen unequivocally in history. We saw gases, gas bikes, all-time high on Ethereum, more than two times previous high. There were people showing screenshots with them paying $400 gas, $1,000 gas to get transactions into Mainnet.

And according to some people, there were potentially even more liquidations that were reported because the single largest venue for liquidations was hyper-liquid. Hyperliquid showed over $10 billion liquidated on hyperliquid alone, but of course hyperliquid is nowhere near the largest venue, implying that probably many of these other venues are underreporting the liquidations. And so probably the real number is much, much larger than what we saw. At the same time, we also saw most of the centralized exchanges have major downtime.

So, Binance famously was down for like roughly an hour, not fully down, but have massive instability in their APIs. People were not able to get inventory in and out of Binance. It's a large part of the reason why so much of the assets that massively drew down were only on Binance. It's huge spreads that we saw between exchanges. Marketmakers just completely unable to quote over a 25 million, sorry, 25 minute blackout, huge API throttles. And Binance ended up refunding over $250 million of people who were incorrectly liquidated over the period of that day. They came out and said, it maya culpa, we messed up, we're going to make it right and try to refund some of the people who lost money.

But overall, it was a massive day of wallet instability, multiple APIs, RPCs that were failing. It was a crazy, crazy, crazy day. I'll stop there. People get the overall picture. Love to get color from you guys. How did you experience Friday and the ensuing aftermath going into the rest of the weekend? I'll go first because I feel like this is the easiest answer. And it's a bit of a cop-out.

And I'm going to be like furniture in this episode. I wasn't really trading. I didn't have any positions on. I saw a bunch of telegram groups I was in blowing up and people were freaking out and I was like, yeah, I'll take a look at this tomorrow. So I missed the whole thing. I didn't sweat it. I'm not a trainer.

If you were holding spot Bitcoin, you don't even notice anything happened because I think Bitcoin went from like 120 to like one on eight, I think, and then ended at 115. Yeah, like I was like, I pulled up coin gecko. I saw a lot of red stuff. I was like, you know, I'm not using any leverage. I'm not trading any perps. Like, I'll see what all the commotion's about later. So I missed the whole.

Good move. Good move. Tom, what was your experience? Yeah, I mean, in some ways, also as a VC, you're also somewhat of like a non-combatant, you know, it's like you were pitting portfolio companies and making sure they're okay and kind of assessing the damage. But like, you know, I also don't have, you know, a big position on one of these, you know, perp exchanges.

So I'm like, not as much sweating it personally. I do also maybe have some sense of calm. I guess similar to you guys, like, been in the industry along, been through, I think, pretty much all these other big wipes. And I think for all of those, there was always kind of a, you don't know where it stops, right? Like during COVID or during afterics, like, you don't know what the next one is going to be. This felt like very, you know, idiosyncratic.

And like, okay, there was this weird, you know, Trump tariff scheme. But like, there wasn't anything more, I guess, fundamental to the market that would make you kind of freak out. Daron, how did you experience it? I guess I had a different experience. I actually think it's funny to think of, like, VCs as, like, the FEMA showing up after the hurricane type of thing. That's like kind of like, you know,

making podcasts and tweet threats. Yeah, I did put on my little red cross. Yeah. So I had a kind of different experience because Gauntlet we run something like $400, $500 of delta neutral strategies. So I had direct experience with getting auto-de leveraged in different places and dealing with

downtime. And I will say, I think the war, between Binance and Hyperliquid over who is more transparent seems to be a pure victory for whoever wins up because the ADL policies are not at all transparent and we'll talk about that later but I actually think this kind of entire episode showed a lot of secret things that are not are like purposely kind of opaque in both centralized exchanges and decentralized exchanges and those things that were opaque were the things that caused the most, like, trade or harm. And of course, I think the most hilarious thing about this in hindsight

is, like, as always, this taco trade thing of, like, Trump always chickening out happened, like, almost in, like, 12 hours. It was, like, unreal how fast it happened. But I do think, like, no one kind of comes out looking very well, looking good. And we can talk, I can talk through how I think, like, everyone kind of has egg on their face from this. Yeah. But we're lucky that the taco thing, V-shaped. Yes, yes. Although not a complete V for. Not completely, but like enough that to Tom's point, you know, during the FTX every day, you were like waking up with some heart palpitations of like, is it finally fucking over? Whereas like, this was like not that.

That's true. It was a pretty quick. It was a pretty quick, you know, okay, it happened and then, okay, it's over and we can tell that it's over. If you didn't see the chart, you wouldn't even know, probably. You just saw the number, right? Right, right. Yeah, I looked at it a few days later.

I'm like, wait, something happened. Besides, now I've learned the phrase ADL. This is like the neurons around flash crash. You remember the last time? Yeah, it's a lot of 2011 flash crash. Yeah, it feels like that more than a real. Right. So everybody now has learned the term ADL.

And they've learned it probably mostly through you, Doug. So do you want to explain for our audience what is ADL, especially for those people who don't trade perps, don't really know what any of the stuff is talking about? Explain auto-de-leveraging and what role it played over this weekend. Yeah, yeah, for sure. So, right, like the, you know, I think the most important thing to remember about

perps are their, they're imaginary, right? So you go long or short on BTC. Perp, there is actually no BTC in that system. So your ability to be short is only predicated on the fact that there's someone else willing to be long. They have cash in the system. So if the system, you know, normally that works fine, people get liquidated. Someone else comes in, buys lower.

margin calls people, people step in, the market works fine. You know when it doesn't, when there's not someone willing to step in or willing to step in at like a reasonable price, right? Like eventually you have to start taking people out of the system. There's no, there's no one, if there's no one willing to be long, right, like you have to start closing out shorts or vice versa. So I mean, the simplest way to think about it is just like ADL is what happens when a perfect change runs out of counter parties. So how did ADL actually play out? Like so yeah.

You were saying that. Yeah. So what happens, like what happened on Friday is that you, I agree. Like obviously BTC dumped. I think you had a lot of leverage in the system. Maybe because people were like farming points and they were doing a lot of these delta neutral strategies long on one, short on another. But right, what happened is you started getting this cascade of liquidations,

especially in hyperliquit and um and finance too i think finance had a bunch of adl as well uh and you start taking eventually right there's nothing left in the order book and and the way the system set up is it will not fill a liquidate at hyper liquid at least it will not fill a liquidation at a price where it would make the position have negative equity so if you only have x amount of margin in your system and uh your bankruptcy prices you know let's say 103. And the price in the market is like 103. It picks someone on the other side and it says, well, number one, you're going to be a forced counterparty. And number two, you're going to be on the other side of this at kind of a distorted price.

So ADL does really two things. Like one, it takes people out of the system. And two, it has like this socialized loss function that keeps the exchange from being insolvent. So what happened is you started hitting a lot of ADL around like 108, 107, 106. I like and so that started taking a lot of longs out. And people are doing this delta neutral stuff. So they, you know, would be short BTC at, you know, hyperliquit, long BTC at lighter and kind of getting points on both sides. Or maybe they were short BTC and long Eth on hyperliquit.

But you take the you take the short side out and now you have a bunch of people who are naked long and they get liquidated. You know, they get ADLed at 108 on their short and they get liquidated at 102. too, well, that's like a major loss. So you think you have a hedge position and you're safe, but you're not right. Like you come on hedge and at bad prices. So this is one of the reasons why, you know, perps, when everything is working well, perps are a beautiful product. People are like, oh, perks are so great.

You know, why doesn't traditional finance use perps like all of us, crypto degen's? And it's like in times of real instability that people realize like, oh, perps are really not like dated futures in that there are these edge cases where, you know, like if you just have a future, you just hold it to maturity, you really can go to sleep and wake up at expiry and say, like, okay, things are, you know, my position will still be there. Whereas with a perp, like, this is what happens when the system goes to real crazy imbalance, where everybody wants to be short and nobody wants to be long. And it's like, okay, well, you know, there's nobody, there's nobody on the other side of this trade. So, sorry, the trade is canceled. There's no longer,

exactly. You're no longer short this thing because there's nobody to match you. You've made too much money. You've won too hard. You know, Dino is forcing you. It's actually what they do. When they're picking positions to ADL, they rank them. And the two criteria they use are how much P&L you're up and how much leverage you're using, right? Because number one, like, people who made the most, you figure, okay, you're going to be the least unhappy if they take you on.

And you leverage, right? We want to take leverage out of the system because if it shoots back up, you get liquidated on the other way. So you're trying to take leverage down. you're trying to take those profitable people. Where that breaks down, those are the delta neutral stuff, because you can have massive P&L on one leg, and then you have a big loss on your other leg. And you know, you're not actually profitable.

But like from the ADL system's perspective, they think you're a big winner. Like, why are you going to complain? Yeah. So this was, I think, what was so, part of what was so rattling about Friday was how unpredictable people felt it was, was that, you know,

there were reports of people who were getting ADLed multiple times in the same day, for, okay, I was ADL on the way down and then I got in and I was ADL on the way up. And like they just, they, it sort of led to a total breakdown of the predictability of perps as a way to express a market positioning. And if you were in spot, like, you know, to Robert's point, like you were just, you were fine. You never noticed anything happened.

Everybody who was in Perps noticed that there would, you know, the market was just breaking down under all the load. And of course, a big part of why things were so lopsided was because of the fact that the APIs were not working. And when the APIs are failing and like people can't get money into Binance, the single largest venue in crypto, then like you just have these massive dislocations where, you know, some people were posting like the sole price. And it was like, it was like spreads of like 20 bucks across different exchanges because there were some places where it was trading at 200. Some places it was trading at like 175. And that kind of dislocation, like that's like a, that's like a 2015 kind of discrepancy that was just like.

It just meant basically that there was a total breakdown in the ability for market makers to move inventory across exchanges. So one of the notable stories from the day was a massive DPEG that took place on Binance across three assets. The first was Athena's USDA, which is the stable, you know, synthetic dollar that Athena has. And then two staking tokens that WB and ETH and B and Seoul, which are the sort of stakes, ETH and Stakes Sol equivalents that Binance that Binan has. And these two assets, so USDA traded down to 68 cents on Binance before finally recovering. Now, for other venues, and I wrote a big tweet thread about this, other venues actually did not have this problem. So if you look at Bybit, Bybit traded to like 95 cents for USDE for like five minutes and then quickly recovered the peg. And if you look on Curve, which is the most

liquid venue for USDA, it was at basically a dollar the entire time. But Binance had this huge like down, which got pretty widely reported as, oh, shit, USTE is depegging, you know, blah, blah, it's breaking. At the same time, these two other assets, the, what is it, WBE, and to B and Seoul, they went down like 80% before regaining their pegs. Now, it was claimed by YQ, who's, you know, a founder, Asian founder, who was saying that he thinks actually what was happening was a coordinated attack because USTE was used as collateral for WB, ETH and BN Seoul.

and if you could push down the price of of USCE on Binance at a time of instability, you could liquidate a bunch of people's WBE and B in sole positions or something like this. There's something about like the index waiting where they were not using the redemption price, but they were using the order book price. I don't know if you guys follow this story, but there's a lot of theories floating around about what exactly caused this and whether this was actually an attack. I have a more Occam's Razor slash less adversarial theory for why

the USDA order book was so skewed. One really big event in the last two weeks for USDA was the getting added in Binance's collateral

but also being used for farming plasma and in particular there was Binance Earn where users could just like click a button that said hey use the stable asset.

I think actually it did say stable coin in the doc, but obviously, maybe not. It shouldn't be kind of described as that. And earn up to 30% on plasma. And plasma was, you know, at ICO was like quite high market capitalized, like 20 plus billion. Now plasma was one of the first assets to have this huge collapse, had a really violent collapse on Friday.

And that was right around the time the USDA E-U-SD-T order book. kind of sir, unwound. And I think there's a more boring explanation than like there are all these people trying to snipe the index construction methodology is there are a lot of users who've never used Athena before, didn't really know they're using Athena. They clicked a button on Binance that said get 30%. And they see XPL going down and their 30% looks like 6%. And they're like exit, exit, exit, I want USDT. And this kind of mass of

users who had never, they might not have even known they were using Athena. There was $2 billion that went, at least that went into Binance Earn. And I'm sure a lot of those users

didn't even know. They just like had tether on Binance. And so I think there might be like more naive explanations like that of like some of these really low liquidity assets really had these like

collapses that in the UXs and a lot of centralized exchanges looked like people's yields went down 80 percent and then they exited and they hadn't you know it was a neat like the timing around that to me was like kind of very interesting you think that happened fast enough for like yeah you think like people are slamming like I'm not getting enough yield button no no I think there's I think there's people who copy like once the once the USCT books started lifting there's tons of market makers just copy trade it down right like momentum wise. And that can become a self-fulfilling prophecy. So like that to me is, I don't know if it's like this like index weight manipulation. It seems like very complicated and you have to time it perfectly

where it's like, oh, just copy trading all these people exiting this earned product. It seems like a So I agree that it's an exotic, it's an exotic theory. And I think like the base case is just that somebody was like, hey, I don't want USTE. I want USDTE because market's dumping. That that does seem more plausible and that just no market makers are able to step in and provide the inventory to bring the peg back. That being said, I think the, it's not implausible that somebody just had an algorithm that was sitting there waiting like, look, if this thing goes down a cent, just ram it as hard as you can down and then start shorting, you know, BN and Sol and whatever or somebody was getting margin called on their perps. Yeah, I think that's. And they were like,

I have a huge position. I need cash instantly. Like, who cares about slippage if I'm going to lose way more money. Again, I don't have any clarity inside of Bidance because it is a centralized exchange that is somewhat opaque. But my hunch is just that like people needed money urgently as they do in flash crash scenarios. Everyone's getting liquidated. Everyone's running around like a chicken with their head cut off. Someone just hit the sell button to get cold hard cash. Or the liquidation engine just, you can use it as collateral and just force you, force you out. I do think the USDA listing as collateral timing relative to this was like it wasn't that long ago, right? Right.

And there's so much interconnectedness that like, well, the thing is the part of the reason why YQ pointed out that this theory would make sense is because there was only a couple days until they were going to change the methodology for B and Sol and WB whatever, Eath. And after that, this attack would not work. And the fact that they depegged so aggressively relative to everything else, like no other staking token crashed. in the way that those two assets crashed, and those two assets were the only two assets that were going to have there. I just think it, I think, like, I believe it's an accelerant

that, like, once there was starting to even be a small deviation, people started maybe looking at that. But I suspect it's, like, something really dumb that started, like, the true, like, you know, first domino was probably not that. That's, like, my strong belief. That's very plausible.

And to be clear, we'll probably never know because I don't think finance would publicize it one way or another. One of the things that was interesting, people were talking a lot about the microstructure, and Guy was pointing out that like, hey, a big part of the reason why Binance just located so much beyond just Binance's own instability and API issues was that Binance, unlike many of the other exchanges that integrate USDA, Binance, one, they were using their own order book as the Oracle price, as like the index price, which is not what you should do if you're not the primary venue, which, you know, finance was not for USDA. They were not looking at any of the other

prices, which caused them to liquidate USDA way too aggressively during the flash crash. And that liquidation, to your point, is like further cause more selling and just drove the USDE price down. And then second is that all the other exchanges have integrated mint and redeem for USDA. And so if you're a market maker, you have inventory on Bybit, you can directly mint and redeem and do Peg Arbitrash for Athena. Binance was the only major venue where they didn't have that integrated. And so as a result, if you're a marketmaker, you can't get inventory in, you're not going to take assets off exchange and then go do peg arbitrage, right? Because it's just like, especially when the APIs aren't working. Oh, the APIs is off like nothing. Yeah,

exactly. Exactly. If the APIs are failing, like, you're not, you're not going to click your way until like bringing your assets out. So it was just, uh, it was kind of a perfect storm of everything going wrong with respect to the, the, the market structure on finance. And so, this is also part of the reason why they specifically Binance only gave refunds, $250 million with the refunds, to people trading USDE, BN Seoul, and WBE. Those three assets were the ones that got

$250 million worth of refunds from Binance who identified that, hey, these improper liquidations, these improper liquidations, we're going to make you whole. That to me seems like a sign that this was not just like, oh, somebody innocently got liquidated and, you know, it wasn't really an issue on their part. That feels to me like something must have been wrong that they identified, like, oh, we fucked up. Beyond just the Oracle construction.

Okay, so one of the other stories, of course, is who did well and who did poorly. And this is what a large part of what's been debated online is like, hey, you know, Defy, obviously, everyone's like, oh, yeah, Ave was great. And, you know, morpho, they liquidated stuff with no bad debt, which of course is like, you know, okay, it's easier for them to, you know, get through this than it is for the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, Duxes. I love to hear your guys reflection, especially, maybe Doug, because I know there's something that you spend a lot of time on.

Tell us how, how D.I, especially on the, on the, on the PEPX side, how, yeah, I mean, I think, right, like, it depends on the, on the perp decks. Some of them had API issues, too. And I, I think, right, like, this kind of opens up how, how decentralized are some of the, the perp dexas of their, if they're, they're just, right. an API or a box that's sitting somewhere. As far as I know, I think hyperliquit held up pretty well. I think it dragged a little slow. Lighter had a bit of offline time, but, you know, luckily, that was after kind of the craziness so people could still get stuff in. So I think in terms of

performance, you know, the PIRPDAXs did pretty well. I think they were pretty comparable to centralized exchanges. Obviously, the transparency is a big issue with centralized exchanges. I think that kind of stands out there is that, you know, there's some stuff around like ADL or what the methodology is at finance and some undisclosed stuff. And we're happy about that. And whatever you want to say like about, you know, ADL, at least like hyperliquit's very transparent. These are the formulas is what we use, everything like that. In terms of the end users, you know, one thing about perks are there, there's zero sum. So for every winner, there's a loser. And so I think like not a significant number of people made money. and they're just maybe not yelling about it on Twitter because it's a bit tone deaf to do that. Yeah, it's a very poor form to be celebrating when everyone else has lost bigly.

Yeah, yeah, exactly. So I think there are some people who are so fine. And then the people I think who really got screwed are the Delta neutral farmers. I kind of said this before. But if you were, you know, you thought you a lot of people have gone into this strategy long, long on one perp deck, short on another. And you're collecting, you're collecting points. And I think that produced a lot of kind of artificial OI in the system that was probably a big contributor to the kind of the violence of the de-leveraging.

So, okay, I actually, it's funny because I actually brought up this point in a panel I was doing today at Das, which is the point you just made, which is that the purpose is zero sum, right? And so like to the extent that this was a derivatives-driven event, it's not like half the people want, half the people lost. Like, mathematically that has to be true. And yet that doesn't feel right at all. Right? It doesn't seem like half the people won, half the people lost, right? Because that should be true in any given day. I think there is actually a question of like the types of agents who won and lost. And like this is just a fundamental thing about exchanges and their users in these tail events, they are extremely adversarial to each other. Exchanges make decisions that either choose to preference the exchange right now, i.e. keep the exchange solid. right now and not lose any revenue like instantaneously at the expense of sort of traders whose

positions get stopped out to cover very lost positions right that's like the socialization and this is sort of not something unique to crypto but i think crypto people just think this is kind of like unique to perps but like the whole basal three framework is about interest rate swap clearing and interest rate swap clearing has this exact same problem of like when there is a sort of liquidation event, how much do you get apportioned the loss to the exchange and how much do you apportion the loss to the set of traders involved? And in general, the different exchanges took very different perspectives on this. So in the case of hyperliquid, HLP depositors were preferenced in a lot of ways over a lot of profitable traders in the sense that they had very

aggressive auto de-leverging. And then basically HLP got to kind of make the profits from that. And in some sense, that is sort of

this belief that your zero sum kind of always in the sense that it's either the exchange that loses and goes insolvent or it's like the profitable traders

who kind of lose because their positions are cut early. But I think there's kind of this, there's this old saying from poker. remember, this guy, Amarillo Slim, I remember kind of like a long time remembering, which is you can,

you can shear a sheep many times, but you can skin him only once, referring to kind of like the difference between kind of like poker sharks and minnows. And there's a sense in which if you preference the exchange as preferences over your traders for profitable, and those are likely the highest yet future revenue generating traders, they may not come back to your exchange or may not may lower their size because they're like exactly at these tail events when I'm making the most money because I predicted the directionality the most correctly you stopped me out like why the fuck would I come back and so I think this is going to be an interesting design choice that we're going to see and fundamentally I think a lot of these ADL mechanisms are very non-transparent right

it's like in the case of binance it's like your relative PNL times effective leverage is how you get ranked in the case of hyperliquid it's just like your relative at all. But these are sort of like greedy algorithms. They don't actually necessarily optimally match like losing positions with winning position, like the minimal number of winning positions to get solvent.

They're actually just greedy algorithms that are like, pick the biggest thing, pick the biggest thing, pick the biggest thing. And in these cases where there are, to Doug's point, these kind of people who are doing these cross trades, oftentimes their positions get picked off the most, even though they're like not contributing the most delta or risk to the order book in the case of insolvency.

And so these might sound like technical nuanced things, but like literally half of the fucking Basel 3 is about this type of stuff. Like that's why it's like five million pages. That does sound very technical and nuanced. But I think all of the perps exchanges are kind of slotting themselves on a spectrum of like how much they value the exchange and how much they value their highest value traders. And they're making this decision between instantaneously, it's zero sum all the time, Or I view the long-term thing of, like, trying to retain users, but maybe the exchange has to eat some amount of insolvencies, right?

And that's, but there's no exchange that it was internalizing a loss. Yeah, I don't think any. Lighter had less ADL, but I think that was partially because LLP was providing liquidity. But that's what I mean by the equity. Yeah, yeah. Yeah. But that's not the equity vaults, not the exchanges. Yeah.

Yeah. Yeah. In indexes, right, the LP vaults and exchanges are separate. But in centralized exchanges, they're kind of the same often. But actually, like in the original Bitmex model, like, I think finance has an insurance fund too, but like who knows when it actually attached it's like in the Bitmex model, there is an explicit insurance fund that sits there and does take insolvent positions up to a certain point. I don't believe any perplex has that. I think drift. I think drift is the only.

Oh, okay. Yeah. Yeah. But like, yeah, all the other ones. So my point is like there is this thing where you're apportioning the loss, right? You're splitting the loss somehow. And everyone's choosing a different split. And I think until this event, because ADLs are so infrequent, people were just like,

ah, like, whatever. We chose a greedy algorithm. It probably works. I don't think there was a lot of, like, very thoughtful design and this choice of these ADL ranking functions. And now there is, like, insane amounts of people looking at this. Because, like, clearly those preference certain types of users quite a bit to others. Well, I think it is important, though, to underscore that ADL is extremely.

extremely rare, right? It's happened very few times in the history of these of these perp dexes, for centralized exchanges, it's only really these crazy tail events where that happens. Normally, the funding rate is supposed to solve the problem of bringing in, you know, people on the other side and balancing out the longs and the shorts. So there are times when funding gets really lopsided. But ADL is genuinely an edge case and it's important to not have people walk away with the impression that like, oh, you know, ADL is like a very fundamental part of how purpose work. It's a fundamental part of how they can work in the tail events. But normally this should never happen.

You know, normally there should be enough latency to bring the other side into the market. Right. I mean, I don't think ADLs are going to stick around as a major conversation point, you know, for the same reason that very few people trading on the CME are talking about like the clearinghouse rules, you know, and like- I actually don't agree with that because during COVID, all the fucking clearing agents blew up. And then these funds had to die because the clearing agent fucked up and didn't post collateral. Ronin Capital is the greatest example.

If you want to Google the greatest legal case on this, Ronan Capital versus CME to 2020. Totally. But that's like of hedge funds. Of the 99.9% of the people that are trading perps with 50x leverage, they are not professional hedge funds. Okay. So I think that what's going to happen is 1% of the users are going to ask hard questions

to all of the different venues that never really existed before. Just like when, you know, smart contract hacks started happening for the first time, everyone really started asking about oracles and smart contract audits and all of these things that they never knew to really ask about before. Now, a small number of people are going to get very noisy about these edge cases, but 99.9% of society, I think, is going to, like, forget about ADL until maybe the next, you know, mass liquidation event of this scale. Yeah. So I think the, so ADL, I think is, reflective of a design choice,

but the deeper design choice, if you look at lighter versus hyperliquid, right? And going to this conversation, which is a caveat that I think most of us are investors into lighter and at least Dragonfly own some hype. If you look at OLP versus HLP, so these are the vaults on lighter versus hyperliquid.

On lighter, the idea, and this is something that I think Vlad was on Twitter actively arguing, like, no, no, no, no, this is good that we did this. OLP lost money, HLP made money. And this is because, I'm sorry, LLP.

LLP. LLP made money and, sorry, well the way around. LLP lost money, HLP made money. And now, from one perspective, you could look at this as a depositor and say, that's great. I want to be in the vault that makes money. I don't want to be in the vault that loses money. But this is zero sum against your users, right? So that means that more HLP traders lost that money and more OLP trader, or sorry, more lighter traders made money. because LOP was stepping in there to take some of those toxic liquidations as opposed to having those traders be fundamentally in a worse position. Because all of that P&L is zero sum, right? It's coming from somewhere.

And the somewhere is the traders. And so the question in some part is also, what is the purpose of these vaults? Why are they designed to be the way they are? Tom, I see you're nodding. I'll kind of hand it off to you. No, I mean, it kind of reminds me a little bit of the Jelly Jelly episode with Hyperliquid a couple months ago

where it was clear that HLP was being preference over, you know, traders or exchange solvency or contract solvency. And I think for a lot of people, including myself, that left kind of like a sour taste because I was also under the kind of impression this was supposed to be kind of this general public good,

almost kind of like a investable insurance fund, like what Bitmex, as Doug was saying. And I think this sort of episode sort of showed that that is true that like this isn't supposed to be a, you know, true profit maximizing strategy. that you can invest into, it's like it is supposed to be the kind of this like backstop for the exchange. And generally that works out pretty well. But in some scenarios, you know, you might lose a little bit.

And I think obviously people also love drama when also both of these vaults are up pretty massively over the past year. So it's like a 5% drawdown or 5% gain on a single day. It doesn't really impact the P&L of the vault strategy. But the point is that your P&L is coming from somewhere. And so, you know, would you rather have it come from the traders or rather have it be directed into the vault? I also like this data point from Connor Grogan at Coinbase who does a lot of on-chain forensics

that like, you know, this is sort of like a little mini extinction event for, I think you looked at hyperliquid, but I'm sure it's true for a lot of perps dexes or perp exchanges that like almost half of the top traders, top wallets on hyperliquid lost like 50% of their worth. And like 100 got totally wiped out to zero. And so it is like, you know, there's a small number per trading and trading in general is like so head concentrated. that you do kind of want to protect those traders and, like, have them continue to trade. And so, obviously, when there's this sort of huge catastrophic event, like, ideally you don't want them to be kind of wiped down to zero. This is why I brought up that quote about the sheep, because it is really boils down to,

like, your future round. This is a multi-round game, right? Like, if you liquidate those users, that's future revenue you're not getting back. Either because they're, like, taste in their mouth is like, I don't want to go to this exchange that over-aggressively liquidated me. Or they're just out of money, right? And so I think there is kind of this very distinct tradeoff in these, between the vaults and the traders, but in centralized exchanges, between the centralized exchange and the traders, right?

Because they kind of are the ones enforcing these rules. Well, I think one major difference between HLP and LLP now is that HLP originally was both liquidity provider in normal times and liquidations when the order book couldn't absorb it. So originally like HLP was very involved in the book. it's like down to 2% of the order book. And LLP and LIDER is still provides a large fraction of liquidity. So I think like it's actually not, at least my understanding, it's not as much a function of the liquidations are handled that differently. Both of them actually kind of do a similar thing when the order book can absorb the liquidations. I think the difference was that lighter was in there as a market maker and actually supporting the books outside the liquidations

and hyperliquid and everywhere else, right? Like when normal market makers went offline, you just didn't have anything in the book outside of that. So LOP was just getting run over like a market maker. Yeah, I think LOP was just sitting there and absorbed, you know, as it was going down, bye, bye, bye, bye, by, bye. And like, you can still see there are some like long tail coins, like last one is like Kanye coin where it's kind of stuck in this,

it's tiny position, so it's not going to affect anything. But it's like stuck as like half the OI and Kanye coin. And it's like, nope, there's. So one thing I will say is I kind of think the jelly, jelly incident that Tom mentioned, which we did cover on an episode because it's a very embarrassing fact for Sam Lesson, which I want to remind everyone of that that coin exists. But the jelly jelly incident, I think, made sort of hyperliger get way more aggressive on their ADL policies after that. And I think they maybe overfit to the like small cap coin ADL, but then

applied it kind of everywhere. And that that was sort of very apparent in the difference between the two. and I just think like this is a this is the kind of weird thing that you know I know I know Robert's saying no I went on I thought Jelly Jelly was not ADL

I thought they just like paused the market or something They actually changed the Oracle they forced changed the Oracle Yeah yeah yeah but but the point is they couldn't really do ADL because it took too much OI it was like too

Like it would have caused more issues if they actually executed right so if they did it when it was smaller size before the positioning got big It would have been easy right So like that incident will make

you refit your ADL model, like what quantile you start liquidating on. I think in general makes you think of like what's going to happen if I can't get out of a position. Yeah, exactly. Exactly. ADL or liquidations or force or like anything, right? Like at one point you have to get out of a position. And I think like these things, even though they seem minute, I think they actually will show up in trader retention.

Like if I look at six month, one year retention of OI and traders, I think this stuff is sticky. Like people left Bitmex because of this, I feel like. This was like half the reason people like, oh, they're just like always purposely liquidating me. And like, okay, I want to go back to the question I posed, which is theoretically, on any given day, not just Friday, but every single day, half the people are winners, half people are losers when you're trading perps. That's just how perps work. It's not like Spot, right? With Spot, like everybody can be winning and it's all great. So if this is true, why does it not feel true? Like, it feels like a little bit of a paradox that like everybody seemed to be having a terrible day on Friday, much more so than usual.

I mean, for the same reason that when you walk into a casino, right, you hear a lot of complaints from the people who lost $100 and you don't hear that much cheering from the people that made $100. Right, but is that not true every single day? Yes. But like it's not true every single day that people are complaining. It's right. Some people win, some people lose, but people have different sensitivity to, you know, for whatever reason. So I do know at least a couple of larger firms are not doing great, took some losses. Market making firms took some losses from this because they are dependent on like, we're going to hedge here, we're going to hedge there, whether the APIs are down or they get ADLed. And like for them, you know, if I'm a guy who punts, right, and I'm up 30 percent, you know, I'm a gambler. That's, you know, just another day. But if I'm a market making firm, I'm wiped out, that's. not great. Okay, so maybe the way to describe it is that the P&L is equivalent. At any given day, the PNL is equivalent, PNLs cancel out, but the allocation of risk got all janky, right, is that normally

market is supposed to allocate risk correctly and say, okay, you're long hair, you're short here, you're hedged because you want to remove your risk. And when ADLs start happening and everything starts going topsy-turvy, that's when the allocation of risk just breaks. And people who weren't supposed to be taking risk or suddenly it's the opposite. Yeah, it's the people who are most risk averse and were forced into taking right yeah exactly exactly right but a lot of times like oh sorry I'm sorry I'm gonna go for it go for it

I was to say a lot of times like financial crisis is like it's not necessarily the amount of loss it's when stuff that's perceived outside anywhere it's when stuff is perceived as safe and all of a sudden it's not safe like those are the worst financial crisis when a lot of like levered hedge funds or there's a lot of money it's like well the system can absorb that

versus like a money market fund breaks a buck I think another thing is this the exchanges made money. That's like to Robert's extending Robert's analogy, you're saying it's zero sum, but there is a sense

in which the exchanges took a wider Vick than they normally do. And that feels bad for people, right? The exchanges took like even higher percentage of than normal. But to add one more layer

to this, the people that made money were short. They were short going in to this insane scenario, right? And I think to your point

to see, why don't we perceive it that it's zero sum and everything nets out is because a lot of people lost a lot of money being long crypto, long as good, long as when everyone is supposed to be in crypto. And when they got wrecked, they all went to the timeline and acknowledged the fact that they got wrecked. But it was like a V shape, right? So there's as many people making money on the long backup.

Well, it's a V shape for some people. No, but everyone got liquid. Some people got, you're in Kanye's point. I'm sure you know. But this gets back to my point about the multi-round. game. Like, if you liquidate all your users, they don't have capital to come back for a lot of them, right? Like, and they're not going to come back. The other interest, ADL made some people who were up actually complain. Like, like, Andrew Tate was like, I was like, I, well, I can't

believe the, what the hell is auto de-leveraging? And somebody's saying, well, if you didn't get auto-de-leverage, you'd actually have lost money because it liquidated, it took you out at a good price. Yeah. That, that, okay, that, that makes sense, is that people even who were up because because they were ADL, they were mad. So I think it's just like the unexpectedness. It's the unexpectedness that people really do not like and causes everybody to complain and get angry. Because again, it's like this allocation of risk thing,

is that people who are not supposed to be down or down and people who are not supposed to be up or up and the people who are up aren't out there being like, yeah, I made money, this is great, because they were not out there to like try to make a bunch of money. There was way more complaining in the casino than celebrating. Honestly, look, I, I don't really have many thoughts about Mr. Tate, but I will say the video he made, so you wrote a tweet that says leverage trading is satanic and he made this video is kind of hilarious.

It's a video about having a profitable position getting ADLed. So I'll tell you people, if you want to see the emotion that comes out of this, watch that video. Boy, I do not. A quick search. I have found the video after this show. Okay, great. So, I mean, another thing, of course, as with any aftermath like this, we saw a huge wipeout in the total leverage in the system. And the open interest on almost every single platform massively dropped. Alts were hit a lot worse than Bitcoin. But you saw basically, alts, open interest pretty much halved. And a lot of people were blaming the massive drawdown that you saw in alts. Many alts got whicked down like 80% plus, even assets that were worth, you know, anomaly 10 billion plus. had huge, huge drawdowns. And people were claiming a lot of this is because of cross-margining is that basically

this is the first massive drawdown where you actually had these really robust cross-margining systems where, you know, like your suite position or your IP position was getting liquidated as collateral for your, you know, whatever else you had in your portfolio. And so this caused this kind of reflexivity on the way down for a lot of alts. But that open interest hasn't built back up yet. It seems like it's now starting to build back for hyperliquid. I think hyperliquid dropped the most. in open interest.

Like, I think it, like, more than halved in the, after the drawdown. But it seems like it was like 15, 15 bill to six bill, something like that, 15 or 16. Yeah, yeah, yeah. Massive haircut. Massive, massive haircut. And I'm sure some of this was because of, you know,

the basis straight across different, uh, purpose exchanges. But it seems like some of that interest is now coming back. Obviously it's Monday, you know, Trump is tacoed, as they say. And so, you know, all is, I mean, I just think the most hilarious thing is my group chats where there's like crypto people and equities people.

And the equities people were like, aha, markets close, fuck you guys. The crypto people are like having this like meltdown. It's like kind of a funny. The bomb market people aren't even back to work yet. Yeah, exactly. They had today off. Yeah, just kind of feel like somebody

threw like a smoke bomb and then closed the door. Well, I mean, it also probably like didn't help that this happened right after market closed, right? Because if you have the ETF straighting, like at least you have some liquidity on like, you know, the actual markets to buy the dip when it goes down. But like, you didn't even have that online. I will say I did enjoy plotting the Trump token complex against a basket of other alts.

And it was down a lot more than the rest. Like during that spite. It like really Trump really, Trump really, Trump and Melania like really sold off. Not as much as Adam, but they were like 70, 80 percent down. All right. Well, speaking of Trump, one of the other stories was. talking about the buildup to this whole drawdown, which was what's now being called the hyperliquid whale. So what happened is, of course, this whole thing was catalyzed by Trump tweeting that,

oh, hey, we're going to restart the tariffs against China. And apparently about 30 minutes before this announcement took place, there was a whale who had hundreds of millions of dollars worth of Bitcoin that they deposited on hyperliquid. and they deposited this just a very short period of time before the announcement was made and closed that position like I think within minutes of the announcement and like the big drawdown that took place

making people believe that this was somebody who had advanced knowledge that Trump was going to do this and their P&L was like something like $200 million that they made on Hyperliquid entering into this massive short position that may have been the initial push for markets to start teetering over just kind of absorbing the shock of this massive,

this massive short that started on hyperliquid. So if you remember, there was another episode like this, also on hyperliquid, what was it? What was the precipitating event? It was also a Trump. I think it was also the Bitcoin whale. This guy with like really old Bitcoin address who just deposited through a unit,

like just, well, like a billion dollars in Bitcoin or something like that. That wasn't tied to a specific event. No, no, no, no. It was just, you know, you just see this, yeah. Wait, is this the same whale? No. No, this is a different guy, right? It was a different.

Yeah, yeah, yeah. This is a Bitcoin whale. But there was nothing to remember. This time it was Tarun. This time it was Turun wearing a hat. I wish. That would have been funny. I think it was notable because that was like a super old address that just woke up

after like 10 years and start to go punt some some purpose on hyperliquid. Right. So this, whoever this person is who did a massive short on hyperliquid, almost certainly there were somebody who had advanced knowledge that Trump was going to tweet this, which makes it seem that like, okay, well, that's not a long. list of people, it must have been somebody who's connected to the U.S. government, or maybe somebody in China who got advanced notice that, like, hey, we're going to. I think it's circumstantial or coincidental. Like, you think it's circumstantial or coincidental? Yeah. Wasn't, like, wasn't the

Chinese announcement the night before that the rare thing, whatever, that he got mad about? I think people were saying that, like, there was like an open conversation topic in China that, like, this was already happening. And so it's not like, maybe there's some coincidence. It shrugged it off, right? Because this news came out the day before, and the U.S. markets were like, ah, whatever, you know, China's doing stuff. Crypto is a global market, Haseeb. It incorporates global information. The U.S. markets might not for this particular thing.

So you guys don't believe the conspiracy theory that this person had some kind of insider knowledge. Isn't he losing money on this current short that he's doing, like, quite a bit? Maybe it's to cover up his insight. Yeah, yeah. I know. That's the theory. Sorry. I think that actually is very plausible to me.

I actually find this extremely plausible. Well, at the very least, at the very least, the amount of attention on this address is, like, insane. You know, it's like the number one story I saw on social media was, like, focusing on this address. Every conspiracy theory is based in something plausible, right? It's not like it's like, you know, that unreasonable of an idea. Here's what I'll say.

Here's what I'll say. It's like the lesson that I've learned from being in crypto for, like, the last five years is that it's almost always exactly what you think it is. It's just like, you just keep, like, 2022 taught me that is that like it's always exactly like it's just like that's like the crypto razor yeah we did get the other uh occum's razor this is zeb's razor with uh james win this week too or there are all these conspiracies that like oh james win is cz or like actually it's jeff and he's trading to like you know make the exchange more notable and then he went on like

a spaces and just some like random british dude who honestly sounds kind of stupid you just complaining i think he was complaining about getting you know 80s this time around yeah he sounded pretty drunk so it was like There you got. That's the simplest answer. Okay. So you guys are totally zero credence in the story. Actually, I will say one thing that was funny about this address.

How many conspiracy theories were they trying to dox this guy? No one was trying to dox this billion dollar depositor, or at least I didn't see any, like, active effort. Whereas whoever this is, like, it's like an internet true crime documentary. If it's a scandal, yeah, because this is like insane. Right. If you like, it's like extremely, you know. Yeah, yeah. This would be like extremely.

national news if it was discovered that somebody was insider trading on Big was on hyperliquid or XUS like if there was some spy that got this info that's just as delicious. Oh, that's like intelligence. True, true.

Imagine this Watergate except the CIA breaks into an apartment and it's like a mattress on the floor with no bed and no other furniture. Yeah, it's James Wynn trunk out of England. Trading just crazy. Well, Doug was about to put it in a word where he was commenting on my conversation.

I was just going to say at least it answers the question of who's who is up and, you know, who's celebrating the casino is Baron Trump, I guess we'll be. Okay. Yeah. That's why we, that's why we're not hearing about this, about the winners, because the winners is all Baron Trump. That's the answer. He has all the P&L on the other side.

Yeah. Okay. Well, I think we're, we can now say that we're mostly at the end of it. The dust is settling. Obviously, there was a lot of snafews and a lot of learnings on the infrastructure. I'm curious for for you, Doug, for Turun, what are you guys seeing from from info providers, right? So there was a lot of failures and a lot of stuff to just totally fell over amidst the market mayhem. Any learning's reflections about like how things are going to be hardened going

forward? Yeah. I mean, it's always it's always tough right. Like it's just crypto, the level of traffic. Like you're on a dex or run an exchange rate. It's just the level of traffic spikes that you get on this stuff. It's just power law. So it's always always tough to like, predict this like how much traffic you're going to get until it actually it actually hits. But, you know, at least you have some data points there. I don't know. It's crypto, crypto infra is always should be fixed. And it's always like, oh, the exchanges are always falling over and they've been falling over

for 10 years. And my guess is their most exchanges are falling over when it's. Well, so I, you know, somebody was asking me this today of like, why can't you just load test this stuff? And I was like, well, it's not that easy. Load test don't always reflect reality. I was like, I don't, I don't actually know why you can't load, you know, why, why, why, why does it keep falling over? People do do their best to do that. I think it's just like always some unforeseen fucking thing.

Like, oh, like, you know, like Ethereum gas went up too much in my like my fucking L2 transactions. It's not getting in. Like, like there's so many. That does seem like that's one of the things that you should be load testing. I don't know. It's not that they don't. It's not. I don't. It's not. I don't. It. It's not that people don't. I'm starting to think that they actually don't. I don't think that's true. People definitely do a lot of this type of stuff.

I mean, I guess one thing you don't necessarily get punished in the market, right? Binance went down for two hours. Are they going to lose, are they going to get punished in the market? They lost $283 million. Yeah, that's true. Yeah, that is true.

Yeah. But I actually would give some credence to the, the Salana L1 kind of version of the world, which Doug is sort of also favorable, which is like, it forces you to test this more aggressively than say the sequencer model. I think like I do agree that people running L2s tend to have a little bit like weaker testing because they kind of like are assumed that like they have some invariant about the sequencer

like it's all in this one data center or whatever. Yeah. I mean people in L1 can't assume that. Yeah. And like you did have stuff like, okay, there's an L2 and we have like force inclusion if the sequencer goes down and like right, we did have a case of the sequencer going going down and I don't know if anybody knew how to do a force inclusion transaction. It's like a lot of this stuff is like theoretical until it's not theoretical.

And then people are, oh, shit, where is this in the docs? This isn't well documented. This isn't. So the docs are going down. That's the, that's how you know. I mean, it's like, get book is a public good. We need to like have it nationalized. Like the blockchains, the blockchains worked, right?

The blockchain's worked. Everything else on top of it, TVD, right? It's kind of like, okay, yeah, you know, every blockchain was technically doing what it was supposed to, and the gas limits were going up. I mean, does that count as a failure when Ethereum is $400 a transaction? I mean, Mert was on Twitter being like, oh, well, obviously this means that Ethereum is broken. And I think that argument is very compelling to people, is that like, yeah, if it costs $400 per transaction, it's broken. That's not how it's supposed to work. I think for a hardcore purist, it's like, well, no, that's the market clearing price for an Ethereum block space.

and like that's how it works. But I think for users, they don't, they're like, no, absolutely. I, I, no, don't agree. Actually, Haseeb, can I reformulate your questions lately? Yeah. Which is, I'm going to ask Doug, what things are you changing in the perps decks you are designing based on this? Because I feel like that is a more like, you know, like, what are things that you will change?

Yeah, yeah, yeah. So, I mean, I think one is right, like we run like on change. So like to the seep's point, right, the chains didn't really go down. So like a lot of perps dexas aren't necessarily on chain. There's on either on a sequencer or, you know, something that's more opaque. So like we're trying to put pretty much everything on chain itself for like all the clearing. Two, I think like the insurance stuff, I think you kind of definitely need an insurance fund in these systems. And like that goes to your point.

And it's like it's not great optically when the vault makes $40 million and there's nothing like no insurance fund loss. Yeah, I mean, I'd say those, like, those two things are, like, pretty critical. You know, you don't want downtime. You don't want kind of like unfair, unfair gains from your ADL and liquidation systems. Okay. Well, we are up on time. Doug, we really appreciate you coming on and educating us about all the, the microstructure stuff. Very helpful to have you in a moment of crisis.

Anything you want to plug or direct people to? Yeah, yeah, yeah. So we are building a perps decks, and hopefully next time this happens, it will be a good place to be trading at. It's Ambient Finance. That's on Twitter at Ambient underscore finance. And also we're co-building

with Fogo, which is a new L-Wong kind of designed to handle this throughput, and that's at Fogo chain. Twitter. Fantastic. Well, we appreciate

all the enlightenment that you have brought our way and we hope we, anybody who was ADL, anybody who made money, anybody who lost money. By the way, if you made money,

you should tag us in this tree because I want to know, I want to hear from the half of you. Yes. Don't DMHIS. If you've lost money, DM, If you're looking for refunds, DMASC.

If you want some money, yeah, exactly, exactly. Haseeb is processing finance refunds for the next two weeks. Yeah, actually any exchange. Anywhere you need refunds, just hit me up. I am the Port of First Call. Thank you, everybody. Hope you're all safe. And we'll see you all next week.