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
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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SBF
@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
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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