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DeFiance CEO: Structural Defects Still Exist in Crypto Perpetual Contracts, Safer Products Needed
Summary: In a recent post on X platform, DeFiance Capital CEO pointed out that the design and market structure of crypto derivatives (especially perpetual contracts) still pose the biggest structural issue facing the industry. Without improvement, it will be difficult to sustain industry growth. He emphasized the need for a more robust mechanism in the industry, ...
In a recent post on X platform, DeFiance Capital CEO pointed out that the design and market structure of crypto derivatives (especially perpetual contracts) still pose the biggest structural issue facing the industry. Without improvement, it will be difficult to sustain industry growth. He emphasized the need for a more robust mechanism in the industry, rather than pretending everything is normal after significant wealth evaporation events.
Reflecting on events such as the 50% to 70% Bitcoin crash in March 2020 and similar incidents with altcoins in October, he attributed the sharp declines to systemic faults in the key price discovery market. The use of 'Quanto model' in BTC perpetual contracts (priced and collateralized in BTC) led to highly reflexive risks and difficulties in hedging during downturns.
As the market recognized these design flaws and stablecoin usage increased, USDT margin perpetual contracts quickly replaced BTC margin contracts, significantly improving market structure stability and reducing volatility.
He expressed anticipation for the emergence of a new generation of perpetual contract products to further enhance the security and market quality of crypto derivatives.
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Link: DeFiance CEO: Structural Defects Still Exist in Crypto Perpetual Contracts, Safer Products Needed [Copy]
