by Coinstrooper Crypto Articles
Quick Take
  • When a $19 billion liquidation wave hit crypto markets in October, even seasoned traders were shaken.
  • For Youngsun Shin, the event was less a collapse than a stress test that revealed how much more resilient crypto’s trading infrastructure has become.
  • “The combination of over-leverage and thinning liquidity created a reflexive loop—forced liquidations caused price drops, triggering even more liquidations.
  • But the fact that decentralized exchanges recovered relatively unscathed highlights just how far the market’s infrastructure has come,” Shin explained.

What Happened

The shift is evident in the growing demand for Bitcoin ETFs, crypto-linked equities, and structured derivatives, products that align more closely with traditional finance (TradFi) in terms of risk management and investor behavior.

This means combining strong custody frameworks and proof-of-reserves verification with deep liquidity pools and KYC/AML processes that prioritize investor protection without hindering participation.

Market Context

When a $19 billion liquidation wave hit crypto markets in October, even seasoned traders were shaken. The sudden wipeout, driven by over-leverage, panic-selling, and thinning liquidity, was a stark reminder that crypto’s most popular instrument, perpetual futures, still walks a fine line between innovation and instability.

In an interview with BeInCrypto, Youngsun Shin, Head of Product at Flipster, likened today’s perpetuals market to “a high-performance car without enough brakes.” For him, the future of crypto derivatives will depend on key factors that every perp trader should know.

For Youngsun Shin, the event was less a collapse than a stress test that revealed how much more resilient crypto’s trading infrastructure has become.

“The combination of over-leverage and thinning liquidity created a reflexive loop—forced liquidations caused price drops, triggering even more liquidations. But the fact that decentralized exchanges recovered relatively unscathed highlights just how far the market’s infrastructure has come,” Shin explained. “

Since 2021, perpetual futures (or “perps”) have grown into the beating heart of crypto trading. On some platforms, leverage can soar to 1000x, attracting retail traders eager for exposure and institutional players seeking liquidity.

When macroeconomic shocks such as recent tariff policy shifts in the US ripple through markets, the result is often a self-reinforcing cascade of liquidations. Still, Shin believes risk infrastructure is catching up fast.

“Compared to 2021, liquidation engines, capital buffers, and oversight are far stronger,” he noted. “We’re seeing real mandates and real-time risk engines that make today’s systems stronger and more responsive.”

The perpetuals market has long been dominated by short-term speculation. Traders focus on funding rates, volatility, and momentum rather than fundamentals. According to the Flipster executive, this approach shaped the market’s DNA for years.

“For a long time, crypto trading was a momentum game,” he said. “But we’re seeing a pivot away from timing the market toward long-term value creation.”

Why It Matters

“The simplicity of modern exchanges opened the doors to a much wider range of traders,” said Shin. “Accessibility and leverage offerings have scaled faster than risk management.”

As institutional and conservative participants enter the space, Shin expects the speculative reflex to wane, giving way to a more sustainable mindset.

In Shin’s view, risk management should be baked into innovation itself, with the Perps expert likening it to adding horsepower to a car while neglecting better brakes.

“If a feature increases position leverage, the corresponding risk controls must go live at the same time, or even earlier,” he noted.

Details

Can Perpetuals Move Beyond the Casino? Flipster’s Head of Product Weighs In

However, the very accessibility that fueled this boom has outpaced the safeguards meant to contain it.

That gap between adoption and control remains one of the defining challenges of the sector. Many new traders, emboldened by easy-to-use interfaces and high leverage, treat perpetuals like slot machines rather than sophisticated hedging tools.

From “What Pumps Next” to “What Sustains Value”

“The question of ‘what pumps next’ is slowly giving way to ‘what sustains value,’” he added. “That’s a healthy evolution for crypto.”

Balancing Innovation and Responsibility

The question now is whether exchanges can bridge the best of both worlds: TradFi’s rigor and the openness of crypto. For Shin, that transformation begins with trust and transparency, not just product velocity.

“To evolve beyond a gambling engine, exchanges must pair innovation with accountability,” he said.

The “Impossible Trinity” of DeFi Derivatives