Unchained Podcast: The Chopping Block
Episode: Inside the $19B+ Perp Crash, ADL Explained, Binance’s USDe/Staked-Token Depeg, and the Hyperliquid Whale Debate
Date: October 14, 2025
Host: Laura Shin
Panelists: Haseeb Qureshi (Dragonfly), Tom Schmidt, Robert Leshner (Superstate), Tarun Chitra (Gauntlet), Guest: Doug Colkitt (Ambient Finance)
Episode Overview
This episode unpacks an extraordinary weekend in crypto markets—possibly "the most wild weekend in crypto history"—when geopolitical shocks triggered over $20 billion in liquidations, extreme trading volatility, and systemic fractures across centralized and decentralized exchanges. The panel delves deeply into the mechanics and fallout of the crash, with a focus on the role of auto-deleveraging (ADL), the behavior of various DeFi and CeFi platforms, algorithmic stablecoin depegs, lessons for trading infrastructure, and the mysterious "hyperliquid whale" trade that may have precipitated the chaos.
Key Discussion Points & Insights
1. The Crash: What Happened?
[01:01 - 04:40]
- Trigger Event: Late Friday, Trump threatened new tariffs against China, sparking a cross-market selloff. Crypto, trading 24/7, reacted torqued and faster than legacy markets.
- Liquidation Stats:
- Over $20B liquidated, 1.6M traders affected (mostly longs).
- Large-cap tokens fell ~27%; small-caps 52%. Some, like Atom, briefly dropped to ~$0.01.
- "Single largest day of liquidations ever...rivaling only the COVID crash and FTX collapse." — Haseeb Qureshi [02:23]
- Systemic Disruptions:
- ETH gas spiked to all-time highs ($4,000/txn in some cases).
- Core centralized venues (Binance et al.) suffered extended API outages, blackouts, and instability.
- Hyperliquid exchange reported over $10B in liquidations alone; many suspect broader underreporting elsewhere.
- Binance’s Fallout:
- Unable to process trades; massive spreads and failed liquidations prompted $250M in user refunds.
"It was a crazy, crazy, crazy day. I'll stop there...Love to get color from you guys. How did you experience Friday and the ensuing aftermath?" — Haseeb Qureshi [04:37]
2. Personal War Stories: Different Perspectives
[04:40 - 08:29]
- Robert: Not trading, unfazed. "Saw a lot of red stuff...I missed the whole thing." [05:12]
- Tom:
- VC, not materially positioned, focused on portfolio risk.
- "This felt idiosyncratic...didn't have anything more fundamental to the market to freak out." [05:29]
- Tarun:
- Gauntlet was running $400M–$500M delta-neutral strategies and had to deal with actual ADL events.
- Critiques the opacity of both CEXs and DEXs, especially regarding ADL policies: "This episode showed a lot of secret things that are purposely kind of opaque..." [06:30]
- Finds humor in VCs acting as "FEMA showing up after the hurricane type of thing" [06:14]
- Doug: "If you didn’t see the chart, you wouldn’t even know—probably you just saw the number, right?" [08:06]
3. Auto-Deleveraging (ADL) — What and Why?
[08:29 - 13:18]
- Explanation:
- Perpetuals are "imaginary"—positions require an active counterparty. If liquidations cascade and there are no takers, ADL forcibly closes positions to keep the exchange solvent.
- Impact in Crisis:
- ADL ranks traders by P&L and leverage; often hurts delta-neutral or hedged players most since their risk gets "unhedged" at bad prices.
- Unpredictability:
- Traders reported being ADL’d multiple times, even when supposedly hedged, eroding perp trust:
"It sort of led to a total breakdown of the predictability of perps as a way to express a market positioning." — Haseeb [13:18]
- Traders reported being ADL’d multiple times, even when supposedly hedged, eroding perp trust:
Notable Quote:
"The most important thing to remember about perps: they’re imaginary...ADL is what happens when a perp exchange runs out of counterparties." — Doug Colkitt [08:48]
4. The Binance USDE Depeg & Collateral Shenanigans
[13:18 - 21:11]
- Binance-specific carnage:
- USDE (Athena's USD synthetic) hit $0.68 on Binance, but Bybit and Curve maintained par or quickly recovered.
- Binance’s oracle/peg construction blamed: used only their own order book (bad), versus integrating redemption/minting like other venues.
- Theoretical "attack" to force liquidations via collateral manipulation, but the panel leans toward non-adversarial causes (mass user exits, low liquidity, no MM step-in).
- Stablecoin Education:
- Binance offered $250M refunds for three affected assets (USDE, WBeth, BNSol).
- Core Lesson:
"It was a perfect storm of everything going wrong with respect to the market structure on Binance." — Haseeb [21:11]
5. DEX vs. CEX: How Did Perp Protocols Fare?
[23:54 - 31:55]
- DEXes had issues too: Some suffered API downtime, raising questions about their decentralization.
- Transparency:
- Hyperliquid: More transparent about ADL formulas, but aggressive ADL can hurt top traders.
- Lighter: Market-making design differences may have absorbed more volatility.
- Delta-neutral ‘Farmers’ got rekt: "If you...were long on one perp DEX, short another, and collecting points, that produced artificial OI—probably a big contributor to the violence of the deleveraging." — Doug [25:10]
- Who really won?
"Perps are zero sum. For every winner there’s a loser. But...it doesn’t feel that way—everyone seemed to lose." — Haseeb [25:37]
Design Philosophy:
"All perps exchanges are slotting themselves on a spectrum of how much they value the exchange versus their highest value traders." — Tarun [28:29]
6. Deeper Mechanics: Vaults, Insurance, and Trader Preference
[31:55 - 39:43]
- Vault Performance:
- Design of protocol insurance/vault funds questioned—should they profit while users get wiped?
- OLP (Lighter) lost money, HLP (Hyperliquid) made money—"But that's zero sum against your users." — Haseeb [34:37]
- Jelly Jelly incident prompted Hyperliquid to make ADL more aggressive, further disadvantaging bigger or more sophisticated traders.
- Multi-Round Game:
- Liquidating high-value users hurts future exchange revenues: "If you liquidate those users, that's future revenue you're not getting back." — Tarun [36:20]
7. Why Did So Few Win?
[39:43 - 44:24]
- Perception:
- Wipeouts (especially for risk-averse delta-neutral strategies and market makers) hurt more psychologically, even if mathematically matched.
- "The people who were most risk-averse were forced into taking risk." — Doug [41:30]
- Pseudo-casino problem:
"There was way more complaining in the casino than celebrating, honestly." — Robert [43:54] - Unexpectedness:
- Even winners (like Andrew Tate) felt upset due to unpredictability or being ADL’d out of “good” positions.
8. Cross-Margining & the Open Interest Reset
[44:24 - 45:57]
- Aftermath:
- Open interest in alts and perps halved; cross-margin systems (collateral used across pairs) caused more liquidations.
- Panel notes:
- Some alts, and even memecoins (e.g., Trump and Melania tokens), saw 70–80% drawdowns—a reflexive unwind not easily recoverable for many.
9. The “Hyperliquid Whale” Debate
[45:57 - 52:02]
- Synopsis:
- Shortly before Trump’s tariff tweet, a whale deposited hundreds of millions on Hyperliquid and aggressively shorted BTC, closing after the big move—making a ~$200M P&L.
- Panel debates if this trader had “insider knowledge,” coincided with pre-existing China news, or was simply lucky.
- "Crypto is a global market...US Markets might not for this particular thing." — Tarun [49:28]
- Ultimately, the panel shrugs off conspiracy, noting attempts at doxxing or inferring motive are mostly speculative.
10. Infrastructure Lessons: Can Outages Be Prevented?
[52:02 - 56:12]
- Reflections:
- Traffic spikes in crypto are "power law," unpredictable even with load testing.
- Panel remains skeptical that exchanges will do more; "My guess is that most exchanges will be falling over when shit [hits the fan]." — Doug [53:12]
- L1s, e.g., Solana, are forced to test infra more aggressively than L2s.
- Ethereum was technically live but $400 gas/txn is effectively a UX failure.
- Infrastructure Needs:
- Doug: Perps DEXs should be more on-chain, use proper insurance funds, and avoid unfair ADL gains.
Notable Quotes & Memorable Moments
- "Defi protocols are the antidote to this problem." — Robert [00:28]
- "As always, this taco trade thing of Trump always chickening out happened almost in 12 hours. It was like, unreal how fast it happened." — Tarun [06:30]
- "The most important thing to remember about perps: they’re imaginary...ADL is what happens when a perp exchange runs out of counterparties." — Doug [08:48]
- "You can shear a sheep many times, but you can skin him only once." — Tarun [28:29]
- "Crypto infra is always...the exchanges are always falling over and they've been falling over for 10 years." — Doug [53:12]
- "If you made money, you should tag us in this tweet because I want to know, I want to hear from the half of you!" — Haseeb [57:29]
Timeline of Important Segments
- Crash Background & Liquidation Wave: [01:01–04:40]
- Personal Experiences & Early Reactions: [04:40–08:29]
- ADL Explanation & Unpredictable Harm: [08:29–13:18]
- Binance Depeg & Collateral Theories: [13:18–21:11]
- DEX vs. CEX Performance: [23:54–31:55]
- ADL, Vaults, and Exchange Incentives: [31:55–39:43]
- Why Did Everyone Feel Like a Loser?: [39:43–44:24]
- Altcoin Wipeout & Cross-Margining: [44:24–45:57]
- The 'Whale' Theory & Conspiracies: [45:57–52:02]
- Infra Reflections, Gas, Testing: [52:02–56:12]
- Final Takeaways & Closing Remarks: [56:12–57:56]
Conclusion: Lessons for the Crypto Ecosystem
The episode underscores how periods of intense volatility reveal design tradeoffs in perp exchanges—between transparency, trader protection, solvent operations, and infrastructure robustness. The guests collectively call for more on-chain, composable systems, with insurance models that share pain fairly, and greater resilience in the face of edge-case volatility. The panel's wry humor carries through, tempered by lessons from a market event that will leave a lasting mark on exchange policy, protocol design, and trader attitudes alike.
For further insights, check out:
If you survived or thrived during the perp crash, tag @haseeb in your victory (or horror) stories!