Empire LIVE | Market Crash: What Happened and What’s Next
7 snips
Oct 12, 2025 
Doug Colkitt, a crypto market analyst with extensive knowledge in liquidation mechanics, joins to dissect the recent crypto market crash. He explains how leverage buildup and delta-neutral strategies led to record liquidations, and discusses the role of auto-deleveraging (ADL) in managing risk. Doug highlights the differences in insurance funds across platforms and dives into the complex dynamics of market liquidity during stress. Listeners gain insights into the factors that influenced this chaos and what builders can learn from the event.
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Perp Farming Hid Concentrated Leverage
- Perp liquidity and delta-neutral farming magnified the cascade when one hedge leg vanished.
- Rapid cross-exchange hedges created hidden, concentrated leverage that unraveled during the crash.
Manage Collateral Per Exchange
- Monitor per-exchange collateral because exchanges cannot see positions elsewhere.
- Avoid assuming cross-platform hedges remove exchange-level liquidation risk.
No Insurance Funds Speeds ADL Activation
- Many PerpDEXs skip traditional insurance funds and rely on vaults that refuse loss-making fills.
- That design moves stress faster into ADL and socialized-loss mechanisms under extreme moves.