Noted. So if the price of btcusd went from $10k to $1 and back to $10k on btcusd on kraken while nowhere else moved, you'd consider that the forces of the free market and that margin longs on kraken should have done more due diligence, yes?
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if all orders are matched properly, why should kraken be liable?
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So you're arguing for circuit breakers or limitations on order management to prevent a price from moving despite intent of the market participants? How do you know when your market is out of sync vs leading? How long do you wait to find out and who gets blamed when you're wrong?
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Yeah, ultimately the answer is more liquidity with time. In some cases people are glad you liquidated them instantly, in others mad that you didn't wait longer. Someone will always end up holding the bag. It's very hard with 24/7 continuous, loosely connected global markets.
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Everything is gameable/hackable -- it's just a matter of whether the risk-adjusted returns of the attack make it worthwhile. Problem arises where the value exceeds the security. Contract participants need to look at the total value of an attack in addition to the index quality.
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It would be one way to improve liquidity but they'd be taking a lot of risk to do this. $50m per exchange, which could be lost in a hack. They could also get hit by a huge whale dumping ~$200m in to them on the way down.
If price moved 10k -> $1 -> 10k on one exchange, obliterating margin positions in the process, said exchange might never be used again
At minimum they have a self-serving responsibility to see repeat custom
That said, market participants should always be wary of thin books