Understanding the systemic issues that affect crypto exchanges, DEXs, and prediction markets. Learn what can go wrong, why it happens, and how platforms legally protect themselves.
Found 3 documented market issues
During volatile markets with high trading volume, exchanges may fail to execute your orders entirely due to "shallow market depth" - insufficient counterparty liquidity. This can prevent you from opening positions, closing positions, or executing stop-losses, even when the price reaches your target.
Auto-Deleveraging (ADL) is a mechanism used by perpetual futures exchanges to close profitable positions when the insurance fund cannot cover losses from liquidations. Your winning trade can be forcibly closed at an unfavorable price without your consent, crystallizing opportunity cost losses.
When stablecoins lose their $1.00 peg during market stress, exchanges may continue using $1.00 for margin calculations while the actual market price is much lower (e.g., $0.90). This can lead to unfair liquidations, prevented withdrawals, and losses even when your actual collateral should be sufficient.