Gauntlet CEO Tarun Chitra on why exchange ADL mechanisms need an update
Gauntlet CEO Tarun Chitra argues that current exchange ADL mechanisms are flawed and require updating following insolvency events.Summary
In episode 10 of The Big Brain Podcast, Gauntlet founder and CEO Tarun Chitra discussed the need to update how cryptocurrency exchanges handle insolvency, specifically concerning the Allocation of Deficit/Loss (ADL) mechanisms. Chitra was prompted to research this after an unexpected ADL event on a low-leverage position, particularly in the context of liquidations failing after October 10th. He contends that the standard ranking approach for allocating losses unfairly concentrates losses and can lead to overshooting during cascading market events. The conversation also touched upon the importance of transparency, insurance funds, and how improving these systems is crucial for perpetual exchanges aiming to attract new users.
(Source：The Block)