Author | Wu Talks Blockchain
Due to a post by Trump that triggered significant volatility in financial markets, Coinglass data showed that as of 8:00 AM on October 11th, the total amount of liquidated positions across the entire network over the previous 24 hours was approximately $19.134 billion, of which approximately $16.679 billion were liquidated from long positions. Binance also issued a statement stating that due to a surge in market trading activity, the platform system is currently under high load, resulting in some users experiencing delays and page errors. Binance stated that it has confirmed the issue and is working on a fix, and that the security of user funds is not affected.
At 8:20 AM, Binance tweeted that all services on the platform have returned to normal and are gradually being restored. Officials will continue to closely monitor the situation to ensure smooth operations. According to Binance contract data, during this sharp drop, the insurance fund balance shared by BTC, ETH, and BNB USDT-based contracts on Binance fell from $1.23 billion to $1.04 billion, with $188 million used to mitigate risks during extreme market conditions.
The USDe stablecoin price deviated from its 1:1 USD peg, falling to a 24-hour low of $0.6567. USDe is a USD-pegged stablecoin issued by the Ethena protocol. Ethena Labs stated that USDe's secondary market price fluctuated due to market volatility and large-scale liquidations. The protocol confirmed that minting and redemption functions remained operational without interruption during this period, and USDe remained overcollateralized. As perpetual swap prices continued to fall below spot prices, unrealized gains from Ethena's short positions were being realized, further increasing USDe's collateralization ratio. The team stated that further updates will be released based on subsequent developments. Simultaneously, the prices of numerous altcoins on Binance plummeted, with ATOM falling to as low as $0.001 and IOTX briefly dropping to $0. IoTeX officials stated that they were aware of this extreme market volatility and confirmed that the IoTeX network and all on-chain assets are completely secure and operating normally. The official team is closely monitoring market conditions and coordinating with partners to ensure stability.
At 9:30, Binance issued a response to the USDE, BNSOL, and BETH decoupling incidents. Its team is currently conducting a comprehensive review of affected users, related liquidation details, and reasonable compensation measures.
According to parsec data, in the past 24 hours, DeFi lending liquidations exceeded US$210 million, of which wBTC liquidations reached US$49.6 million, ETH liquidations reached US$39.7 million, and cbBTC liquidations reached US$31.6 million.
Notably, Hyperliquid experienced the highest amount of liquidations across the entire network, with liquidations reaching $10.276 billion in the past 24 hours, including $9.3 billion in long positions. HLP Valut's earnings surged from $80 million to over $120 million, an increase of approximately $40 million in the past 24 hours. Furthermore, amidst extreme market conditions and massive liquidations, Hyperliquid experienced a record daily net outflow of 642 million USDC. Hyperliquid's AUM has declined from over 6 billion USDC in late September to approximately 5.1 billion USDC currently.
According to MLM monitoring, a Bitcoin whale closed 90% of its BTC short positions on Hyperliquid and completely closed its ETH short positions, profiting approximately $190-200 million in a single day. Notably, the whale established nine-figure short positions in BTC and ETH just minutes before the market crash. This represents only its public positions on Hyperliquid; its activities on centralized exchanges or other platforms remain unknown. This account may have played a key role in the market movement that day.
In response to market rumors that "Crypto.com and Wintermute are suspected of collapsing," Crypto.com CEO Kris Marzsalek commented that "the system is running perfectly and it is unfounded FUD." Arnaud, BD and partner member of the Wintermute team, said the remarks were false.
BitMEX co-founder Arthur Hayes tweeted that market rumors suggest that large centralized exchanges (CEXs) automatically liquidating collateral associated with cross-margin positions is the cause of the price plunge for many altcoins during this decline. The prices of many high-quality altcoins will not return to those low levels in the short term.
The Lighter team issued an outage warning at 12:23 UTC+8. Orders could not be processed or executed and the problem was being fixed. Lighter status showed that the Lighter mainnet service had been interrupted, and the API, front-end, and transaction sending were all interrupted. Lighter's official Twitter account stated that this was a technical problem caused by abnormally high TPS in the past 12 hours. In response to some users' feedback about positions being liquidated and data confusion, Backpack stated that due to recent market fluctuations, the Backpack system is under high load; historical data is being synchronized; all real-time systems are operating normally, including markets, balances, positions, and borrowing. Data statistics from the Backpack official website show that on October 10, the Backpack contract liquidation volume reached US$181.6 million, of which the SOL-PERP liquidation volume reached US$71.8 million; total user assets were US$421 million, platform assets were US$425 million, and the reserve rate was 100.89%.
According to @BroLeonAus, during this period of extreme market conditions, the performance of several decentralized contract platforms (PerpDEX) has varied significantly. Lighter experienced the most serious issues, with orders and withdrawals unable to proceed normally since last night, resulting in a loss of approximately 10% in its LLP vault. Backpack experienced order lags and position anomalies, but has since returned to normal. Aster DEX has not yet experienced any trading anomalies. The edgeX vault saw a 0.48% return, inconsistent with the scale of the market liquidation and possibly due to a one-day data delay. ParaDEX and Extended vaults both saw returns exceeding 10%. Hyperliquid performed the best, operating stably and without any issues. Its HLP vault generated over $40 million in profits in a single day, with a return exceeding 10%, far exceeding the combined total of all other platforms.
Solana core development team Anza stated that during last night's massive liquidation event, the Solana network underwent its largest stress test to date, reaching a peak processing speed of 100,000 transactions per second (TPS) while maintaining stable operation. Its validation client, Agave, handled six times the peak traffic and a load of 60 million compute units (CUs) per block without any performance degradation.
At 2:00 PM, Bitget CEO Gracy Chen tweeted that the team noticed some users had received unusual market quote notifications on the Bitget app over the past 30 minutes. This was due to historical message delivery delays. Officials are working with the service provider to resolve the issue, which only affects price notifications. All trading, deposit, and withdrawal services remain normal, and user assets are completely safe.
Uniswap founder Hayden Adams tweeted that the massive sell-off is a good reminder of how DeFi is different. Uniswap's trading volume today is close to $9 billion, far higher than normal, and the platform has not experienced stress or downtime. OKX CEO Star said that OKX's global risk control system is operating stably, the platform remains smooth in various regions, and all system indicators are at normal levels. Hyperliquid stated that during the recent market volatility, despite record highs in traffic and volume, the Hyperliquid blockchain had zero downtime or latency issues, and HyperBFT consensus and execution handled the peak in throughput. This was an important stress test that proved that Hyperliquid's decentralized and fully on-chain financial system can be robust and scalable.
In the evening, He Yi posted a message stating, "Due to significant market volatility over the past 16 hours and the influx of users, some users have experienced trading difficulties. I am deeply sorry." For losses caused by Binance, please contact customer service. We will analyze your account activity and determine compensation. This will take some time, but losses caused by market fluctuations and unrealized profits are not covered. Several influencers (KOLs) have hinted that Binance may be about to release its largest-ever compensation package.
Crypto analyst @ali_charts stated that the crypto market experienced one of the largest liquidations in recent years today, with approximately $19.3 billion in positions forced to close in a single day, affecting approximately 1.66 million traders. Bitcoin initially fell approximately 17% intraday before rebounding partially. Ali noted that this market trend mirrored the rapid pullback that followed Bitcoin's 2021 high of $69,200, which also saw the concentrated liquidation of highly leveraged long positions. He believes that while short-term rebounds may be seen as buying opportunities, investors should remain cautious and strengthen risk control and stop-loss management.
Mindao, founder of the DeFi protocol dForce, posted on social media that the recent crash and Luna's collapse are similar in that both occurred when major exchanges began accepting non-fiat stablecoins as high-LTV collateral, leading to the spread of risk across exchanges. Back then, it was UST, and today it's USDe. The combination of stability and high collateralization ratios has deceived most people. When introducing non-fiat stablecoins as collateral, the worst combination is using market price feeds while allowing high collateralization ratios. Furthermore, the lack of a fully open arbitrage environment on CEXs leads to low arbitrage efficiency, further amplifying the risk. LSD-like assets face the same problem. These assets are essentially volatile assets disguised as stability.
Cryptocom CEO Kris Marszalek stated: "Regulators should investigate the exchanges with the largest liquidations in the past 24 hours and conduct a thorough review of the fairness of their trading practices. Were any exchanges slowing down to a standstill, effectively preventing people from trading? Were all trades priced correctly and in line with the index? What were their transaction monitoring and anti-money laundering procedures? Were their internal trading teams fully independent? With $20 billion in liquidations, many users suffered losses. Regulators are responsible for protecting consumers and ensuring market integrity."
Tom Lee, co-founder of Fundstrat and chairman of BitMine, the Ethereum treasury company, told CNBC: "The decline was expected, given the 36% gain since the April low." Today's VIX index surged 29% at one point, marking the 51st largest single-day move ever and placing it in the top 1% of extreme markets. "Today's decline is a good clean-up. I want to tell you that the market is indeed a bit nervous, but unless there's a real structural shift, this pullback is a buying opportunity." I wouldn't call the market a bottom today, but we know that under the current circumstances, we're looking at strong returns over the next week and even month. If someone asks me what the market will look like in a week, I'd say there's a pretty good chance of it rising.
Andrei Grachev, Managing Partner of DWF Labs, stated: "Today's market crash was not due to fundamental factors like the FTX debacle, but rather to the tariff announcement and the subsequent leveraged liquidations. Market liquidity has been depleted, but Bitcoin and strong projects should recover soon."
Mindao stated that common approaches to using such stablecoins as collateral include setting a high collateralization ratio and a fixed price anchor, or using a market-based price feed with a low collateralization ratio. The most dangerous combination is using a market-based price feed while allowing a high collateralization ratio, which, combined with the low arbitrage efficiency of centralized exchanges, amplifies the risk. He believes that LSD-like assets face similar issues.
Conflux CSO Forgiven published an analysis: The October 11th crash is speculated to be a premeditated attack against Binance and a major market maker. The three most severely affected margin instruments were USDE, Wbeth, and BnSol. These three instruments serve as margin for a unified account, and their liquidation prices are based on Bn's own spot market price, rather than a rigid anchor. Amidst the widespread decline in Bitcoin and altcoins, contract traders are likely to suffer losses. Furthermore, the coin-based margin, on top of the falling coin prices, saw significant de-pegging from the local currency. USDE fell to as low as 0.65, Wbeth to 0.2, and BnSol to 0.13. Even hedged portfolios would be unable to maintain their positions due to the significant margin reduction. This triggered a massive liquidation of most Binance futures positions and these three instruments. Another piece of evidence that this was a premeditated and planned attack is that the timing was very subtle, just after Binance announced the adjustment of the oracle price and before the actual adjustment took place. The announcement should have been on October 6, and the actual adjustment was to take place on the 14th.
He Yi posted on X, "Binance will take care of any problems with it. Those friends who picked up low-priced unpegged assets yesterday made their money by staying up all night, and we will not recover that part. The financial management users involved in the three unpegged and packaged assets are being gradually processed. As for the losses and margin calls incurred by trading users during the period when our platform was down, we will deal with them one by one." He Yi also pointed out that the use of customer service in training and cross-language customer service with translation may easily lead to more backlogs and problems, but Binance will not compensate for personal trading losses or unprofitable losses caused by price fluctuations.
Binance announced that due to recent market volatility and platform-related issues, the prices of USDE, BNSOL, and WBETH have decoupled. For contract, margin, and lending users affected by this incident between 05:36 and 06:16 (UTC+8) on October 11, 2025, the platform will provide compensation within 72 hours. The amount will be the difference between the market price at 08:00 (UTC+8) on October 11, 2025, and their actual liquidation price. In addition to automatic compensation, other affected users can contact customer service to submit individual requests. Binance also stated that it will strengthen its risk control mechanisms, including incorporating redemption prices into the index calculations for USDE, WBETH, and BNSOL, setting a minimum price threshold for USDE, and increasing the frequency of risk parameter reviews to address extreme market volatility.
