A fresh bout of soul-searching has gripped the crypto derivatives industry as leading market participants argue that the market’s structure is fundamentally flawed – not just unlucky.
His critique targets the vertically integrated model that dominates both centralized exchanges and some so-called “decentralized” platforms, where custody, matching, risk management and prime brokerage-like functions are bundled into a single entity. In stress events, that consolidation can turn one venue into a systemic choke point.
According to Arthur, most participants recognized this as a design flaw. As stablecoin usage grew, the market share of BTC-margined quanto perps on BitMEX fell from “>80% to less than 20% in one year,” and by mid-2021 “most people are using USDT margined BTC perps.” That collective shift, he argues, “have definitely improve[d] the resilience of market structure significantly” and reduced volatility in BTC, though he still “look[s] forward to a new product design […] significantly better than the current iteration of crypto perps.”
If Gaevoy and Arthur focus on architecture and instruments, pseudonymous trader The White Whale (@TheWhiteWhaleV2) has put the human cost of recent failures front and center in a X post with 1.8 million views.
The industry’s reaction, he argues, revealed a misaligned set of priorities. “Victory laps” over “Zero bad debt!” and “Liquidations processed flawlessly!” may show protocols survived, but “Great. The protocol didn’t die. But users did.” He insists that “protecting the protocol IS important – obviously. But it is not the same thing as protecting traders.”
As an alternative, White Whale points to Drift on Solana as one venue that has at least attempted to encode protection at the protocol level. Drift’s liquidation protection, he writes, “isn’t magic. It’s not flawless. But it exists – and more importantly, it worked.” A key rule is simple: “Is the oracle price diverging by more than 50% from the 5-minute TWAP?” If so, the system temporarily halts liquidations, filtering out “scam wicks” and pushing edge cases to the insurance fund.
Across Gaevoy’s structural critique, Yan’s product-design history and White Whale’s exit from HyperLiquid, a common conclusion emerges: today’s crypto market is not just volatile – it is structurally biased against traders in moments of stress. Whether the industry now prioritizes circuit breakers, segregated roles and on-chain protections will determine if 10/10 becomes a turning point, or just another preventable disaster.
At press time, the total crypto market cap fell to $3.09 trillion.
