2026-01-08 13:27:41

The wave of crash on January 8th(1011) directly shattered market makers' arbitrage dreams. According to the latest data, this plunge caused approximately $20 billion in cascading liquidations, throwing the market into chaos.

The core issue is this: when the ADL(auto-deleveraging) mechanism is triggered, market makers' short positions used for hedging are forcibly liquidated. In a rapidly falling market environment, these institutions can only watch helplessly as their unhedged spot positions remain. Simply put, the previously promised "neutral strategy" of perpetual contracts has completely failed.

What are the results? A large number of institutions collectively withdraw liquidity. In Q4 2025, the liquidity of global order books has fallen to the lowest point since 2022, making the market particularly fragile.

Even more painfully, the delta-neutral "easy profits" relying on funding rate arbitrage have become almost worthless. The annualized returns used to reach double digits; now? Less than 4%. A large influx of newcomers into this space is dividing the cake into smaller and smaller pieces.

Interestingly, platforms operating in B-book mode are profiting immensely during this turbulence. Meanwhile, the risks in the DeFi perpetual contract market remain high and easily manipulated. In contrast, the traditional financial perpetual contract market is experiencing explosive growth and has become the new trend.

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SigmaValidator

· 01-11 06:45

20 billion liquidation, arbitrage dreams shattered, liquidity at an all-time low, this is the true face of perpetual contracts. --- Delta neutral has dropped from double digits to 4%, and newbies are still rushing in? That's hilarious. --- B-book platforms are laughing the hardest, DeFi is still being manipulated by players, while traditional finance is actually taking off. The situation has reversed quite a bit. --- ADL triggers a short squeeze and gets liquidated immediately, institutions have even lost their hedging. This design itself is problematic, right? --- Liquidity has crashed to the lowest since 2022, and the market reacts strongly to any small movement. No wonder big institutions are pulling out. --- A wave of sharp decline directly exposes the "neutral strategy" facade. Market makers are finding it increasingly difficult to operate. --- Annualized returns have dropped from double digits to 4%, and some still believe in arbitrage with perpetual contracts? Wake up. --- Interestingly, traditional finance's perpetual contracts are becoming more popular, while the NFT scene is clearly about to be overthrown.

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LadderToolGuy

· 01-11 05:29

20 billion liquidation to deal with these arbitrage monsters? They should have come earlier, haha. Once ADL is triggered, the true nature is revealed—so this is what hedging is? Liquidity has truly bottomed out, which is a bit crazy; be careful. A double-digit drop to 4%, and this return is not even as good as saving in a bank. Traditional finance is getting popular over there; the tides turn, everyone.

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SillyWhale

· 01-10 23:18

Wow, 20 billion just exploded, market makers really lost big this time. That's why I cleared my positions early—without liquidity, the game is over. Delta neutral annualized return dropped from double digits to 4%, what a joke.

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MerkleTreeHugger

· 01-10 03:06

Once again, the ADL mechanism is causing trouble; this time, market makers really took a big hit. --- 200 billion liquidation? Liquidity will become even scarcer, and operational space will shrink. --- Delta neutrality has dropped from double digits to below 4%, rookie traders are probably going to learn their lessons the hard way. --- The B-book platform is laughing, but DeFi perpetual contracts are increasingly resembling casinos. --- The logic of hedging perpetual contracts has always been fragile; once liquidity dries up, everything is exposed. --- Are perpetual contracts in traditional finance really gaining momentum? It feels like CeFi is quietly surpassing. --- Institutions are withdrawing liquidity en masse, while retail traders are still sleepwalking into arbitrage—who's more miserable, you ask? --- Order book liquidity hitting new lows; this market is really starting to tighten up. --- In simple terms, the dream of neutral strategies is shattered; everyone has to face real volatility. --- The golden age of funding rate arbitrage is over; now it's all about risk tolerance.

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MevShadowranger

· 01-08 13:51

Market makers really shot themselves in the foot this time. Once ADL is triggered, it's all over. Where's the promised hedging?

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ForeverBuyingDips

· 01-08 13:49

Now it's all good, the market maker's dream is shattered. Should we retail investors instead buy the dip?

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ForkTrooper

· 01-08 13:38

Ha, the arbitrage dreams of market makers have been shattered. Serves them right. --- 20 billion liquidation? Someone should finally reflect on perpetual contracts. --- Delta-neutral annualized return has dropped from double digits to 4%. This trick is too obvious. Who still believes in this? --- Interesting, B-book platforms are making a killing, while DeFi is being manipulated even more fiercely. Traditional financial perpetual contracts are taking off. The landscape has changed. --- Liquidity has fallen to the lowest since 2022? Definitely a black swan signal. Be cautious. --- Honestly, with continuous influx of newcomers splitting the cake, it's no different from gambling. Arbitrage opportunities have long disappeared. --- Once the ADL mechanism is triggered, institutions are confused. Neutral hedging is all nonsense. That's the real truth. --- Perpetual contracts are just this? They hyped it up so much back then. Now look at it, it's hilarious. --- Traditional financial perpetual contracts are on the rise. DeFi is indeed risky to an absurd degree. This shift is inevitable.

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ForkTongue

· 01-08 13:33

Market makers are being exposed again and again. This time, they just said no to $20 billion and it’s gone—truly incredible. Once ADL is triggered, it’s game over. The hedge dream is shattered, and the narrative of perpetual contracts is completely broken. Liquidity has dropped to its lowest point since 2022. The market is now fragile as paper, and any slight wind or movement can cause it to kneel. The annualized two-digit arbitrage dream now only yields 4%? It seems that newcomers have turned this opportunity into plain porridge. Meanwhile, the B-book crowd is laughing all the way to the bank, earning huge profits. They are actually the real winners of this wave. Traditional finance’s perpetual contracts are starting to take off. The landscape has changed, and DeFi still carries too much risk and is easily manipulated.

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PretendingToReadDocs

· 01-08 13:32

20 billion liquidation is outrageous; this time, the market maker really crashed. Perpetual contracts are just a trap.

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LiquidityWhisperer

· 01-08 13:29

20 billion liquidation, this time really took down the old leeks, the arbitrage dream shattered into pieces. --- ADL triggered and directly dumped the market, hedging shorts were forcibly liquidated, this design is really brilliant. --- Liquidity has run out, the market is so fragile it collapses at the slightest touch, who still dares to take the bait? --- From double-digit annualized returns to 4%, this yield is almost a tax on new leeks' intelligence. --- B-book platforms are making a killing, retail investors are losing badly, it's always the same game. --- DeFi perpetuals are so easily manipulated, I really dare not touch them. Traditional finance is actually more stable? --- Market makers have withdrawn liquidity, just waiting for the next round to cut the leeks. --- Funding rate arbitrage is dead, those who rely on it to make a living will have to change careers. --- Lowest liquidity since 2022, this market is now a ticking time bomb.

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