Analysis: ACT flash crash due to Binance adjusting the leverage position limit for ACT, resulting in market makers' excess positions being liquidated at market price

ChainCatcher news, encrypted KOL and former FTX community partner Benson Sun analyzed in a social media post, "Today at 18:30, ACT suddenly crashed by 50%. The reason is that Binance adjusted the leverage position limit for ACT, allowing a maximum of $4.5 million in positions with 1x leverage. Some market makers' positions exceeded the limit and were directly liquidated at market price. After the contract price collapsed, there was a huge price difference with the spot market, causing the spot market to crash as well.

Binance announced the change at 15:32 on April 1, with an effective time of 18:30 on April 1, giving users less than 3 hours to react. Even more outrageous is that Binance had already announced a modification to the ACT position limit on March 31, and on April 1, they cut the position limit for low leverage by another 50%.

Before modifying the rules, Binance should assess how many positions would be liquidated. If there are large positions from market makers, they should also be notified in advance. As an industry leader, we hope Binance can handle this incident properly."