OKX: Risk Management System Prevented Cascade Liquidations on the Crypto Exchange

Cryptocurrency trade OKX detailed how its danger safety mechanisms helped the platform keep away from large-scale cascade liquidations throughout the market crash on October 11. According to the firm, its built-in danger administration system routinely reduces leverage during times of high volatility when asset costs fluctuate sharply. This prevents margin calls and protects each patrons and sellers from pressured place liquidations.

OKX’s Chief Risk Officer, Yuri Mushkin, acknowledged that the trade’s danger engine structure acted immediately, safely lowering credit score positions that fell under margin necessities.

“The danger administration mechanisms at OKX demonstrated their effectiveness throughout at the moment’s market crash, safely lowering credit score positions that dropped under margin necessities,” Mushkin stated. “During risky durations, when correlations between belongings enhance sharply resulting from value spikes, such techniques should function instantly to cut back leverage and shield each patrons and sellers from margin defaults.”

He emphasised that danger administration infrastructure in the crypto trade is considerably extra complicated than in conventional finance, as customers can pledge a variety of digital belongings as collateral. To reduce the chance of cascade liquidations, OKX’s system differentiates danger profiles between tokens and stablecoins accepted as collateral.

Mushkin additionally famous that in the October market crash, a big USDe token depeg occurred, however OKX’s mechanisms have been in a position to comprise the impact and stop it from spreading to different markets.

Earlier, OKX founder and CEO Star Xu acknowledged that the trade’s international danger administration system “functioned flawlessly” throughout the crash. “The platform remained secure and easy throughout all areas — all techniques operated usually,” he emphasised. Xu added that the median order execution time on OKX was three milliseconds.

On October 11, the cryptocurrency market skilled its largest crash in historical past. According to CoinGlass, over $19 billion in positions have been liquidated in a single day, and whole market capitalization fell by almost $660 billion. During the crash, some customers of main platforms, together with Binance, skilled value show errors and mass liquidations. Some critics imagine that a part of the market’s decline was exacerbated by vulnerabilities in Binance’s value oracle, which have been exploited by malicious actors.

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