Analysis: The flash crash of ACT was caused by Binance adjusting the leverage position limit of ACT, and the excess positions of market makers were c

On April 1st, encrypted KOL and former FTX community partner Benson Sun posted on social media to analyze that at 18:30 today, ACT suddenly collapsed by 50%. The reason was that Binance adjusted the leverage position limit of ACT, with a maximum leverage of only $4.5 million. Some market makers' positions exceeded the limit and were directly liquidated at market price. After the contract price collapsed, a huge price difference appeared between the contract and spot markets, causing the spot market to also collapse. The time of Binance's announcement was 15:32 on April 1st, with the effective time being 18:30 on April 1st, and user reaction time was less than 3 hours. What's even more outrageous is that on March 31st, Binance had already announced a modification to the position limit of ACT, and on April 1st, they cut the position limit for low leverage positions by 50%.

Benson Sun suggested that before Binance modifies the rules, they should first evaluate how many positions will be liquidated. If the positions of market makers are large, they should also be notified in advance. As a leading company in the industry, it is hoped that Binance can handle this incident properly.