Binance, one of the world’s biggest cryptocurrency exchanges, said it would consider new marketplace controls after a single large order apparently triggered a flash crash early Friday in polkadot (DOT) trading contracts.
- Prices for the quarterly perpetual-futures contracts on polkadot were trading around $33.25 right around 1:45 coordinated universal time (8:45 p.m. EST), when suddenly they tumbled 99.2%.
- The contracts fell as low as $0.25 in less than a minute, before quickly bouncing back to around $33.
- In just that single minute, some $18 million of the contracts changed hands on the exchange.
- "A user, who held a large position, put a single stop market order in the market, which triggered this needle," a Binance representative told CoinDesk in an email. "It didn't affect any other users' positions as we are using mark price for liquidations."
- "We will add more controls of stop market order size limits to prevent a similar recurrence," the representative added.
- While the futures market flash crashed, the cryptocurrency held steady near 33 USDT in the spot market, Binance's data shows.
- These "coin-margined" perpetual futures are products margined and priced using a cryptocurrency, such as bitcoin, instead of the dollar (fiat).
- A stop market order is an order to buy or sell a stock at the market price once the user-decided stop price is hit.
- In this case, the user was holding a large position that exceeded the total available bids in the market, according to the Binance representative.
- Polkadot is a blockchain network that supports various interconnected sub-blockchains called parachains, designed to provide a higher transaction throughput than the leading Ethereum network.
- The Polkadot network's DOT token is one of this year's hottest cryptocurrencies, quadrupling in price already in 2021, for a market value of more than $30 billion. The Wall Street firms Goldman Sachs, JPMorgan and UBS are even reportedly trading exchange-traded products linked to DOT on a Swiss exchange.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.