Conversation

SBF
@SBF_FTX
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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SBF
@SBF_FTX
Replying to
@SBF_FTX
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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SBF
@SBF_FTX
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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SBF
@SBF_FTX
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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SBF
@SBF_FTX
10) At some point, if you allow leverage, users might get liquidated, and you can't stop that. But you can at least do what you can to give them room, so that they don't start immediately snowballing.
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Loser Leaves
@loserleaves
Replying to
@SBF_FTX
and
@SBF_Alameda
That's only if they were using stable-coin for margin, since the derivatives are quoted on fiat. So someone using BTC only as collateral, would have gotten wiped on 40% drawdown at ~1.2x initial leverage...