If, however, the market becomes too volatile for these mechanisms to prevent major losses, OKEx cuts losses with its tiered margin system-it prevents liquidation cascades when the market is extremely volatile. The platform has also set position limits in place, preventing clients from opening overly large positions if leverage on a certain asset is too high. One of the ways the exchange minimized the overall market impact of the crash is by diving liquidation orders into smaller pieces through its proprietary liquidation engine. The built-in security mechanism ensures that even during extreme market volatility the possibility of ADL or clawbacks is significantly reduced. The exchange shared with CryptoSlate that it managed to cut losses at the early stage of the crisis thanks to its risk engine. However, that didn’t seem to be the case with OKEx. How OKEx managed to stay afloat during the crisis With no mechanism in place to prevent an avalanche of liquidations, many exchanges suffered greatly during the weekend. With smaller altcoins experiencing significant drops, exchanges were caught off-guard and experienced a high volume of liquidations, ADL, and clawbacks. Such a huge loss was mostly attributed to the fact that almost every cryptocurrency tends to follow in Bitcoin’s steps. However, the road towards its ATH was cut short by a massive crash on Sunday, where over $20 billion was wiped out from the market in mere hours. The world’s largest cryptocurrency had a spectacular week, with a mix of recent economic instabilities fueling its growth to over $12,000. While Bitcoin has never been synonymous with stability, the sudden crash it saw on Sunday caught even the most experienced traders unprepared. Source: TradingView Bitcoin’s spectacular growth cut short on Sunday The exchange’s CEO Jay Hao said that Sunday’s flash crash on both Bitcoin and Ethereum resulted in zero clawbacks and zero ADL (Auto-Deleveraging), as the platform’s built-in security mechanisms prevented cascading liquidations after Bitcoin dropped more than $1,200.
The huge crypto crash that took place on Sunday could have been much worse if it weren’t for OKEx’s risk engine.
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