ACT flash crash revelation

BN contract rule adjustments triggered a flash crash of ACT and other Meme coins: a "April Fool's Day scare" revealing a structural crisis in the crypto market.
On April 1st, BN announced a reduction in contract leverage and position limits for low market cap tokens such as ACT (for example, the position limit for ACT was reduced from 4.5 million to 3.5 million USD). After the rules took effect at 18:30 on the same day, ACT plummeted 55% within 36 minutes, and tokens like TST and DEXE fell sharply by 20%-50%, with over 8.7 million USD in liquidations across the entire network.
The core of the controversy: the conflict between the risk control mechanism and the market reality
1. Forced liquidation triggers a death spiral
After the adjustment of the rules, users who did not take the initiative to reduce their positions were liquidated by the market price of the system, and the price collapsed due to concentrated selling pressure. The evaporation of 75% of ACT contract open interest is difficult to explain by "spot selling", and the market speculates that market makers were forced to leave the market due to insufficient margin.
2. Market Maker Algorithm Strategy Failure
Wintermute is accused of selling tokens after the flash crash. Although its founder denies manipulating the market, he admits to engaging in AMM arbitrage. Analysis points out that market makers rely on high leverage to maintain liquidity, and rule adjustments directly impact their profit models, triggering a chain reaction.
3. Data contradictions weaken the credibility of explanations.
Among the tokens adjusted in the same batch, MEW did not drop but instead rose, while DEXE, which is not on the list, experienced a flash crash.
The prices of multiple currencies precisely synchronized and dropped at 18:30, far exceeding the normal market fluctuation range.
The fatal flaw of the Meme coin ecosystem
1. Liquidity Vulnerability
Low market cap tokens have weak depth, and a small amount of capital can trigger a huge shock. The chain reaction of rule adjustments → market maker withdrawal → liquidity depletion → panic selling reveals the real paradox of "decentralized vision, centralized risk."
2. The illusion of value support bursts
After the ebb of market sentiment, meme coins are extremely sensitive to liquidity changes. This incident confirms that the price is still dominated by leveraged games and chip games, and any external disturbance could trigger a crash.
3. Power Structure Imbalance
Exchanges, market makers, and whales build a sophisticated system through rules and algorithms, while retail investors become the objects of risk transfer. The "responsibility slicing" among various parties after a crash highlights the harsh reality of unequal rights and responsibilities within the ecosystem.
Industry Insight: Restructuring Risk Defense System
1. Exchange risk control needs to balance security and market sensitivity.
Preventive measures should establish a dynamic assessment mechanism to avoid "over-defense" triggering new crises. Parameter adjustment needs to be warned in advance to reduce the impact of forced liquidation.
2. The market maker algorithm urgently needs pressure-resistant upgrades.
High leverage strategies need to incorporate extreme market circuit breaker mechanisms, develop adaptive liquidity management models, and prevent single points of failure from triggering systemic crashes.
3. Investor education is urgent.
Retail investors need to recognize the high-risk nature of low-capitalization tokens, avoid excessive leverage and concentrated positions, and be wary of the hidden risks behind rule changes.
This is a textbook of risk that there are no winners at one time
The flash crash did not have a clear "culprit", but it tore apart the most real survival rule of the crypto market: in the battlefield of liquidity, algorithms and human nature, systemic risks are often detonated by the most vulnerable links. When the defense mechanism itself becomes a source of volatility, the industry urgently needs to move from brutal growth to resilience building. For retail investors, self-protection is always the first survival skill in the institutional-led game