fiddy.dime

darklord of $DIME
founder @tradeparadigm, @paradex

[fiddy.dime @fiddybps1]

ADL is a relic of isolated margin systems copied from @BitMEX. It doesn’t work for options, and at best is a terrible experience for cross-margin users.

Paradex deliberately chose not to implement ADL.

It breaks cross-platform hedges, adds a lot of unpredictability to users’ risk management, and fails for complex assets and portfolio-margin setups. There’s also no guarantee of finding profitable ADL counterparties under cross margin, without further amplifying liquidations. @DeribitOfficial also operates without ADL.

Socialized loss (SL) is a far better experience for users and scales easily to more complex assets and margin types 👇

Portfolio-Level Integrity
ADL operates at the single-market level, without considering the user’s overall account exposure. The trader who is high on the ADL queue due to a highly profitable/leveraged position on one market isn't necessarily profitable on an account level.

Example:
BTC = $100,000, ETH = $4,000
Insurance Fund (IF) = $100,000 collateral + short 40 BTC perps.
Alice has a $4M BTC-ETH spread on, i.e. +40 BTC perps (long) and –1,000 ETH perps (short)

→ Both BTC and ETH rally +5%
→ BTC to $105,000, ETH to $4,200.

Under a normal scenario, Alice’s BTC and ETH positions offset, leaving her with flat PnL. But the insurance fund’s bankruptcy price is $102,500. To protect the fund, ADL is triggered and forces Alice’s BTC leg to be closed at $102,500 as it cannot afford a loss that is higher than $100,000. Alice realizes BTC profits based on a 2.5% move while her ETH short continues to lose 5%, leaving her with a $100,000 loss. This can, in theory, lead to an unfair liquidation of Alice's account.

"Ethena" Risk
The same is true for a trader that could be holding the opposite position on a different exchange. If the position is subject to ADL, it closes the profitable leg, leaving the user with a naked losing leg. This destroys the intended hedge and amplifies risk exposure. @ethena smartly negotiated this provision away for it's trading on CEXs but that now means the risk of ADL is being unfairly borne by the exchange's other users. Smart for Ethena but not scalable for the exchange.

Given the potential market exposure imposed on affected accounts, ADL often triggers a forced unwind of positions, leading to fire-sale behavior that further amplifies market volatility and erodes liquidity.

This mechanism is particularly unsuitable for exchanges with options, where users frequently hold multiple correlated instruments on the same underlying asset for hedging or risk-neutral strategies. In such environments, forcibly closing a single profitable leg through ADL can break portfolio hedges, destabilize the portfolio and, by extension, the market.

To our knowledge, NO EXCHANGE discloses how cross-instrument exposures are handled under ADL.

Conditional + Reversible
Under a SL mechanism, losses are conditional, deferred (not immediately realized) and give users a choice. They are applied only upon withdrawal, and only if the platform is still experiencing a solvency deficit at that time.

If the market rebounds, or if the insurance fund grows (either through profitable liquidations or additional allocations) and covers the deficit, the shortfall is erased and no SL is applied.

By contrast, ADL crystallizes losses instantly and doesn’t give the user a choice. If a sudden market move causes insurance fund depletion, the system immediately closes profitable positions via deleveraging. Those users now permanently lose their realized profits.

SL introduces time, and recovery potential into the loss-allocation process while giving users a choice. It penalizes only those who exit during insolvency, while long-term users benefit if solvency is later restored.

Fair + Predictable Risk Distribution
ADL targets specific traders (often highly leveraged and profitable ones), forcibly closing their positions to cover the platform shortfall. It penalizes traders for system-level insolvencies outside their control.
SL by comparison avoids arbitrary targeting and maintains fairness. All users share the risk evenly and only when a persistent shortfall exists.

Transparency
ADL is a complex, queue-based mechanism that is very hard to anticipate for users. In contrast, a SL adjustment is a simple, transparent function of the insurance fund shortfall relative to the platform’s TVL. As it affects users only when they withdraw, it ensures predictability and transparency in the loss allocation.

Compute Efficient = "Chain Friendly"
SL simplicity makes it straightforward to implement on-chain in a trustless manner. There is less compute complexity which means cost and throughput constraints are alleviated. ADL’s dynamic queue logic is computationally heavy as it requires scanning all accounts on the platform, making it very expensive and error-prone. It also adds congestion to a system that is likely to already be congested when ADL is triggered.

October 10 = Wake Up Call
If your CEX can’t guarantee portfolio integrity under stress, it’s the architecture that’s broken. Switch to DEXs with intelligent loss-allocation that protects hedges, distributes risk fairly while staying conditional and predictable.

Paradexio

[Stablecoin Sean @seanlippel]

This is so highly misleading by only focusing on the ADL on the largest coins, which suffered from far less price discolation and ADL overall than other coins

If you are running a long / short book as I was, you are long these assets below, not short them

This also looks at ADL in a vacuum, and without regard to anything else in an account

Your larger shorts are going to be in the other top 50 alts that are dog shit imo (ATOM, STX, APT, FET) - those shorts closed much earlier and blew you out leaving with only longs to liquidate your account

There are so many other places where the @HyperliquidX platform is broken for perps (no ADL transparency / queue, no flash crash protection, one touch price oracles for liquidation (non time based), no whale risk blocker, and zero insurance fund is laughable for someone at $hype scale

So please get this propaganda off my timeline, it is insulting. I can assure you @HyperliquidX did not perform well for anyone running a larger profitable long / short book, or even any sort of mild leverage on just longs. I cannot recommend to anyone serious or an instó to trade on hype when they don't even acknowledge these issues.

In fact, between @DriftProtocol and @dYdX where I run very similar books, only @HyperliquidX blew me out.

Still waiting for my @chameleon_jeff chat 🫡

[fiddy.dime @fiddybps1]

fuck so much alpha packed in ~30 mins!!!

if you are serious about trading options

this is a MUST watch every week!

set 30 mins aside to hear from the best

with @dlawant, gReg , @0x_tiago and @minus1_12 !

[Paradex @paradex]

Theta Gang is back 🔥

The largest trade in Paradigm history: $2.3B notional / 28,000 BTC

Greg Magadini is joined by @minus1_12 from Thalex, @dlawant from Anchorage and @0x_tiago from Paradigm

Ep #3 covers:

+ Why isn’t BTC falling?
+ Who’s paying to be long?
+ Is AI making traders better at options?

[fiddy.dime @fiddybps1]

@AllanPeters how do we get in touch with you

would love for you to design something for us!

[fiddy.dime @fiddybps1]

this

[clement.dime @clemmakesapps]

If you find any engineers working in crypto and not concerned about eMudhra, give them a strong rebuke

If they don’t listen, short their project to zero

Users deserve better

[fiddy.dime @fiddybps1]

@chfastestfatman RFQ on Paradex

RFQ on less liquid venue

Take on Paradex

Take on less liquid venue

Win (even though u are aggressor on both venues)

[fiddy.dime @fiddybps1]

calling all options arb0ooors.

paradex prices are often significantly better than the price on other exchanges. free arb for anyone that can park capital on both venues. all you need to do is RFQ on both venues and pocket the difference

you're welcome ❤️

[fiddy.dime @fiddybps1]

ETH calendar roll guy

@paradex would have saved u $500 in spread and fees

someone pls tell this guy he's giving away free money

[fiddy.dime @fiddybps1]

RFQ traders on @paradex saved ~$140k last month and the reason is simple - retail pays zero on Paradex.

start contrast to the research making the rounds earlier this week that ~400k retail wallets trading on HL are down $280m..... with over half of those losses went to fees, not trades!!

these two trends are inevitable. the more retail loses to fee drag, the more it hurts retention and the more activity moves to zero fee platforms.

[Tiago @0x_tiago]

https://t.co/MbRRxalGX0

[fiddy.dime @fiddybps1]

majors liquidity on options has improved 10x in the last month making us the most liquid place to trade options on chain.

but its not just majors... as @domdosu reminded me yesterday, our alts orderbooks also starting to look really good. still small size but this is just a glimpse of what is to come... i expect several orders of magnitude improvement in the coming weeks!

[fiddy.dime @fiddybps1]

@NeedMore_Crypto @paradex Exactly doesn't need to be this way

[fiddy.dime @fiddybps1]

Reminder that you DON’T need

to split your trading

across multiple accounts

you just need BETTER tech ❤️

trade 100+ assets from one unified account on @paradex

[Paradex @paradex]

You DON’T need to split your trading across multiple accounts

You just need better tech

Trade 100+ options and futures from ONE unified account on:

https://t.co/knrBXIybhG

[fiddy.dime @fiddybps1]

agree

[nick (Big Wick Nick) @ExitLiqCapital]

this shit makes me want crypto to go straight to zero

[fiddy.dime @fiddybps1]

vol compressing is a function of the market maturing. this is also. a huge structural reason for why options take time to mature. when vol is high it makes insurance very expensive so it means less buyers and it is then generally a seller driven market for the first few years. then once vol gets sold off the buyers step in the latter years and then the market really explodes volume wise. every other alt asset will follow this trend!

[Evinho @0xEvinho]

$BTC moves half as much as it did in 2021 👀

44% volatility over the past year vs 81% back then. Paradex is pricing the next month at 36%.

Calm market = cheaper options. Are you buying or selling here?

Try it yourself 👇🏻
https://t.co/JoZx9xi64S

[fiddy.dime @fiddybps1]

🔥🔥

[fiddy.dime @fiddybps1]

GODLIKE!!!! 💥💥💥💥💥

LARGEST TRADE IN PARADIGM'S HISTORY!!

[Paradex @paradex]

Largest trade in @tradeparadigm's history

$2.3B notional / 28,000 BTC 🔥

This liquidity powers Paradex RFQ:
https://t.co/knrBXIybhG

[fiddy.dime @fiddybps1]

PSA

this taker would have saved $1600 in fees

we put money back in yo pocket

trade on @paradex 😂

[Global Option Monitor @option_monitor]

📉 Bearish $ETH Put Spread 1000x ($4.8M)

🔴 Sell $2,100 Put · 30 Oct 26
🟢 Buy $2,200 Put · 30 Oct 26

Max Profit: $89.3K → if ETH at/below $2,100
Max Loss: $10.7K → if ETH at/above $2,200

You Pay: $10.7K | Max Profit → 8.3x your cost

Copy on Paradex 👇
https://t.co/Ba6kKptSbo

[fiddy.dime @fiddybps1]

great to see more platforms also share our notion that block flow has immense alpha!!

well done @derivativemonky!

pls keep the updates coming!

[Derivatives Monkey 衍生品猴子 (billionaire arc) @derivativemonky]

track every Options TRADE that go through via Tape or RFQ on https://t.co/3EroQ3Q57x :)

You can sort it by size, time & every metric literally under section Option Order-flow Section! Track trades from every exchange that offers options😏

Track every RFQs via aggregated Block RFQ section.

View analytics & p much any metric you need - view pay-off , entry at the exact time on chart & whats dominant in the market!

[fiddy.dime @fiddybps1]

even the pros like @Halcyon_Waters agree

serious option traders need option monitor on their desktop!!

👉 https://t.co/btjnuENIxU

[Halcyon Waters @Halcyon_Waters]

Good to see the Global Option Monitor live. We followed the first trade from the walkthrough all the way to settlement this morning. The BTC short strangle settled $40 below its put strike and the seller kept 96% of the premium it collected.

It was not a calm ride though. On the first evening BTC slid to 80,600 and the position sat almost $5k under water before it slowly came back.

That part never shows on a screen of blocks, where the entry is a single row. What it feels like to hold the trade lives in the marks that follow it every 10 min until expiry. One trade is still only one trade, of course.

Thanks @paradex and @0xEvinho for opening this up to everyone. We will keep following the blocks it brings to the surface on @DeribitOfficial.

Powered by #CayoLargo 👉 https://t.co/xeogMsemIl

[fiddy.dime @fiddybps1]

ETH calendar roll guy

@paradex would have saved u $500 in spread and fees

someone pls tell this guy he's giving away free money

[fiddy.dime @fiddybps1]

if it isn't clear by now

fees are the enemy of retail

good news is there is a solution

@paradex

[Mike Dudas @mdudas]

across 400k retail traders who access hyperliquid via 3rd party apps, cumulative losses were $280m

more money was lost to app fees vs trading losses and retention was abysmal as most retail got rekt

// via @hypurrdash

[fiddy.dime @fiddybps1]

the Gigavault is quietly paying you 10%

on the back of some options yield!!

you know what to do!

[fiddy.dime @fiddybps1]

if you call yourself a serious options trader

you NEED the Block Trade Monitor on your desktop

@0xEvinho explains why 👇

[Paradex @paradex]

Introducing the Global Option Monitor

every serious options trader knows

that block trades are where the alpha is

monitor block trade activity across ALL crypto exchanges

from ONE screen

or copy the whales with ONE click!