Users of the Binance.US platform were spooked by a massive dip in Bitcoin price from $65,500 to $8,200 within seconds
Just A Bug on Binance?
The Bitcoin price suffered a 88% flash crash on the Binance.US platform, causing concerns amongst its users on the reliability of the trading platform’s algorithm.
The glitch was subsequently identified to be caused by a bug that has since been fixed, according to the platform’s spokesperson. Binance.US told Business Insider the following in an e-mail on Oct. 21st:
“One of our institutional traders indicated to us that they had a bug in their trading algorithm, which appears to have caused the sell-off. We are continuing to look into the event, but understand from the trader that they have now fixed their bug and that the issue appears to have been resolved.”
In a tweet by @WuBlockchain, an independent journalist also highlighted a drop on FTX’s BTC/USD pair at about the same time. This has led to the speculation that it was the same market maker as FTX, and the same bug caused the glitch.
If the crash is not a result of a glitch, the lack of depth could have caused the dip. However, this should not have happened today as platforms do implement certain lockdown mechanisms. Coinbase deploys a price-protection-points (PPP) mechanism. If an order tries to fill outside of certain parameters, it will be canceled by the engine.
More Accountability Needed
Binance.US needs to be cautious of their activity. There could be consequences if any of their employees were beneficial to the glitch or knew to capitalize on the opportunity before it happened. The platform has responded to the incident by calling it a glitch caused by an algorithmic bug.
Although assurance was given to users that the bug was repaired, the community ought to be given a more detailed account of the incident. Some on crypto Twitter have shouted for answers, and rightly so. Institutions such as Binance.US must provide some level of comfort to their community that all incidents are dealt with transparently and responsibly
If an exploit on any protocol necessitates a post mortem report, the same level of transparency also applies here. The issues that demand clarification are, whether affected users suffered losses, and if they do, how are these losses compensated, and finally, what remedial steps were taken.
The lack of a detailed response will be detrimental. Decentralized exchanges (DEX) such as Uniswap and dYdX are feeding on the narrative of being able to offer greater security and transparency. DEXs are slowly gaining favor as skepticism continues to grow against centralized platforms.
It is impossible to find the best fit that promises absolute transparency with the benefits of a centralized order book and centralized liquidity. Liquidity providers on DEXs can also suffer from large price variations which are called ‘impermanent losses.’ Therefore the best way to strike a balance is for platforms such as Binance.US to adopt best practices that promote transparency.
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Source : bsc.news
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