The Crypto Ecosystem has come a long way since Sam Bankman Fried’s FTX destroyed billions of investors’ wealth in 2023. But the entire industry needs to be evidence of a bullet. Crypto “Event held in Consensus Hong Kong on Wednesday.
“You have a traditional player who has now entered the space. For us, most of our transactions happen about exchange settlements, where you can actually do so while you can trade on the exchange, you can actually do so. We keep our assets custodian,” Brevan Howard said. “So this technology has been far ahead of the point of view of the past 18 months since (but) there’s more to do.”
Sharma highlighted the need for 24/7 risk management, including markets, counterparties and credit risk.
Counterparty risk refers to the possibility that one party may be involved in a transaction and fail to meet its obligations, resulting in losses to the other party. This type of risk is higher for crypto than traditional finance, given that there are no intermediaries such as banks and liquidation housing to guarantee trust and settlement, and concerns both directional and non-directed arbitration players. This is the cause.
“When conducting arbitration, counterparty risk is the most important risk,” Fabio Frontini, founder of Abraxas Capital Management, added that credit risk is also very important.
Frontini highlights the importance of simulating stress testing scenarios, referring to permanent futures markets where users can lose margins when halts with trade that is not the case in traditional markets . “That (the stress test) can be very rewarding if done properly,” Frontini added.
Mike Cuhell, CEO of market-making company Flow Trader, said the need to make innovation transparent to win investors’ trust and ensure “move data availability and liquidity without fragmentation.” I emphasized it.
“It’s a key ingredient to get the best price and give you the chance to trade whenever you want,” Keunel added.
The market’s ability to absorb large orders at liquidity, or at a stable price, emerged as a major concern after the collapse of FTX and the fall of Alameda, a sister concern. Although the depth of purchase orders has certainly improved due to the fragmentation or distribution of liquidity across major coins, multiple Defi platforms, blockchains and networks, it remains a concern.