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2) NOT INVESTMENT ADVICE. TRADE RESPONSIBLY.

3) The obvious answer is "100x". But I don't think it's the correct one.

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1:13 PM · May 24, 2021Twitter Web App

4) See: with 100x leverage,: a) you can only put on tiny positions b) you get liquidated almost immediately so if what you observe is "BTC goes down 1% and $1m got liquidated", that might be 100x leverage positions.

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5) But that wasn't the fact pattern; instead, BTC went down 40%, and $20B got liquidated. So anyone who was 2.5x or more leveraged was at risk, and they added up to $20B. This was mostly users with 3x-20x leverage who contributed.

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6) What can you do about this? Well, there's a limit to how much it makes sense to do. Crypto was bullish on crypto, so it got long crypto. But one thing you can do is make sure your margin requirements are reasonable.

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7) If you let people put on 20x leveraged positions for $100m each, that'll add up FAST. Those are very likely to get liquidated, and for large size. FTX always has small liquidates relative to the field; even on the biggest days we don't usually get above ~$300m.

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8) Partially, this is because we don't encourage massive risk taking. But partially it's because of our margin system.

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Collateral on FTX is calculated in USD value terms. We follow a multi-currency cross-margining methodology and thereby accept a variety of non-USD assets as collateral for derivatives and spot marg...

9) (a) We scale up margin requirements for bigger positions; help.ftx.com/hc/en-us/artic. (b) we cross-collateralize everything. This means that all of your assets can be used as collateral, and can help prevent liquidations.

help.ftx.com

Collateral Management

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