2000s: Conspicuous Consumption 2010s: Conscious Consumption 2020s: Conspicuous Consciousness?

I spent the last two months writing this non-stop; I agree I probably could've made it more legible, but I at least tried to formalize a market phenomena that people ignored (at best) People are up in arms it because it gets at something real, even if its style is imperfect

Drift's implementation of pro-rata is public, should you want to go into minutiae without making blanket statements about why equity weighting is wrong (w/o proposing *why* position size is better, especially in fairness terms) https://t.co/agA268Ks6o https://t.co/OS4EW2gH3j

If the perpetuals exchange were decentralized, I should be able to see the code and verify this! It is not public for Hyperliquid Decentralized exchange should have public, verifiable ADL policies https://t.co/eW9folgA78

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In this figure I keep the square shaded to handle the case that the water-filling is correct (e.g. it only liquidates the correct amount of PNL) I was unable to find that in the data — if there is proof they were partially closed, that'd be awesome https://t.co/62o6Lp7in6

As another large HYPE holder accused me yesterday: "show me the tweet/paper, and I'll show you the bags" There are a few things here that are worth pointing out, despite everyone FUDing, not reading the paper, and making conclusions based on the post (skill issue? illiteracy?)

Excellent research post on perpetual futures, auto-deleveraging (ADL), and crypto market structure. Shoutout to Hyperliquid for the transparency that allows this research to happen

Episode 4 of EBONY x Nationwide: Amplified Rising Visionaries features NFL linebacker Zaire Franklin, founder of Shelice’s Angels, on instant connections, balance, and building impact on & off the field.

I don’t know if Jeff is right or Tarun is right so we should make them both do one very hard math problem to decide a winner

You have a very rich friend who likes to gamble. You go to a casino together and end up costing the casino a lot of money. The casino wants its money back. The casino would be wise to not only ding your rich friend, because he's a recurring customer. They should ask you to

@ConejoCapital @SonarX_HQ @xulian_hl @jdmaturen @theo_diamandis @victatorships @MaxResnick1 @hydromancerxyz I also forgot @RiskRinger !

It's high time to update ADL algos. ADL is a necessary last resort for perps, but @tarunchitra demonstrates there are much better ways to do ADLs. Raise this to your favorite neighborhood perp exchange! Raising your voice is the only way to move best practices forward. 👇

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Discussing this with Tarun at Solana money summit.

the most in depth paper ever on The Great ADL Event of 10/10 on @HyperliquidX has just been published i had the pleasure to do a lot of data cleaning & a proper taxonomy of reconstructing the event from a few snapshots available my favourite visualization of the event here:

@ConejoCapital @SonarX_HQ @xulian_hl @jdmaturen @theo_diamandis @victatorships @MaxResnick1 * @hydromancerxyz

I want to thank @conejocapital, @hydromancer_xyz, @sonarx_hq, and @xulian_hl for helping me procure, verify, and clean data from October 10. The dataset used can be found on @conejocapital’s Github. I want to also thank @jdmaturen, @theo_diamandis, @victatorships, @MaxResnick1,

Paper:

Takeaway: we don't need to be in the dark forest of central clearing, even if @RobinhoodApp just bought LedgerX (best central clearing IMO) We can use math to design better verifiable mechanisms that will 𝘢𝘤𝘵𝘶𝘢𝘭𝘭𝘺 𝘣𝘦 𝘢𝘣𝘭𝘦 𝘵𝘰 𝘩𝘰𝘶𝘴𝘦 𝘢𝘭𝘭 𝘰𝘧 𝘧𝘪𝘯𝘢𝘯𝘤𝘦

The deadline’s close, finish quests and increase your chances now

What does this mean for real exchanges? - Counter to the intuition @chameleon_jeff initially had, there 𝐞𝐱𝐢𝐬𝐭 𝐩𝐫𝐢𝐨𝐫-𝐢𝐧𝐝𝐞𝐩𝐞𝐧𝐝𝐞𝐧𝐭 ADL mechanisms that are easy to implement - These methods trade-off solvency, revenue, and fairness to traders in different manner

We also show that these algorithms outperform on fairness and revenue The trilemma implies that they have to trade-off solvency for this(e.g. the exchange has to hold some bad debt on its balance sheet) But the magnitude of loss is 10x smaller with optimized ADL algorithms

Moreover, we backtest a number of these strategies against the real data from @HyperliquidX on 10/10 and show that virtually all of these algorithms would have 𝐬𝐚𝐯𝐞𝐝 >$𝟓𝟎𝟎𝐌 𝐨𝐟 𝐭𝐫𝐚𝐝𝐞𝐫 𝐏𝐍𝐋

We show that one can construct an infinite set of easy to compute risk-aware strategies that non-uniformly haircut winners (see below) and both theoretically and practically outperform Queue and Pro-Rata in terms of solvency, fairness, and revenue

Don’t do it! We give lawn tips on how to grow healthy grass. Here are things not to do or neglect to do this winter in the north and south to keep your winter grass healthy.