@dev0xx

Why do these crashes happen in crypto? They are a side effect of regulations and systemic risk profile > less regulations = more innovation = outsized returns > less regulations = less regulated exchanges = more crashes Its a healthy feature, not a bug. And it will keep happening b/c of incentives: 1. Exchanges are happy providing leverage and making fees. very lucrative biz. A deltra-neutral market-making book's biggest days are often these crashes. high volume, high fees. 2. Ppl in crypto like to gamble so there is product market fit. There is demand for leverage. Based on Nassim Taleb's ideas, my thinking is: > In crypto, crashes happen more often than TradFi as part of "natural evolution" where only the best survive. No central bank to subsidize otherwise dead projects. This makes cryptomarkets Antifragile as we all get used to these crashes and learn to survive. > In TradFi, CBs and govs do their max to reduce volatility with QE, rates etc. They 'subsidize' otherwise dead companies that take more time to crash. Less crashes, bu higher magnitudes, it makes the system Fragile So crashes aren't always unhealthy and the benefits can outweight the cost. Benefits are the outsized returns we get in crypto, and the cost is this regular short-term vol. Really depends how you look at Risk also. A system can can survive 5 crashes of 20%, and learn from each crash. But it cannot survive 1 single 100% crash. So volatility isn't always bad if it reduces Tail Risk, which u don't get really get to recover from.

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