Weekly Key Metrics

Network Fees

• Bitcoin: The -22.6% drop in fees to $2.62M underscores subdued on-chain activity on Bitcoin amid the week’s market volatility, with most activity happening on CEXs and perpetual DEXs

• Ethereum: Fees surged 258.6% to $23.31M, fueled by the DeFi flows needed for collateralization of loans, liquidations, and swaps amid the large volatility

Exchange Netflows

• BTC: Inflows of $1.77B highlight Bitcoin’s role as a haven asset during the crypto market cap wipeout from Friday’s liquidation cascade, drawing capital away from riskier assets

• ETH: Outflows of $656.85M reflect the needs of available capital on hotwallets to re-collateralize loans and rebalance positions

October 10 “Black Friday”: Liquidity, Credit, and Flows

On October 10, 2025, the crypto market experienced its most severe single-day liquidation event in history, with $19.3 billion in positions forcibly closed across exchanges, surpassing the 2022 FTX collapse by over 50%. BTC plunged almost ~10% from $120K to $110K within hours, while altcoins like ETH and SOL shed ~20%, and smaller tokens faced drawdowns up to 80–90% amid a cascade of leveraged unwindings. This flash crash, dubbed “Crypto Black Friday,” was ignited by U.S. President Trump’s announcement of 100% tariffs on Chinese imports effective November 1, amplifying existing macro fears around global trade tensions and inflation.

The drop was extremely severe on altcoins, as can be seen in the next chart, with a mean daily price drop for the top 1500 coins of over -60%, a long tail event not seen in any previous wide crypto market crashes:

Percentage Difference Between Daily Low and Opening Prices. Source: @ltrd_

The event’s mechanics reveal a tightly coupled failure in liquidity and oracle systems, where a minor initial sell-off on Binance spiraled into a market-wide panic. Auto-deleveraging mechanics on perpetual exchanges triggered a feedback loop on basis trades unwinding. When the short legs of many basis trades were automatically closed, traders were left with unwanted long exposure. Their subsequent rush to reopen short positions to remain delta-neutral added intense, artificial selling pressure to the market.

Data from Coinglass shows over 70% of liquidations originated from perpetual futures on centralized platforms, with Binance accounting for 45% of the total volume wiped out, highlighting how thin order books and high leverage (up to 100x) amplified the shock.

In contrast, DeFi protocols like Aave and Uniswap saw only 2.5% of their TVL exposed to cascading liquidations, as on-chain collateralization provided a buffer against off-chain disruptions. The total DeFi liquidations accounted for over $200M.

Interestingly, over the week RWA protocols were the only type of DeFi protocols seeing TVL inflows despite the drop in the pricing of their TVL, signaling a flight to security:

Defillama TVL by Categories. Source: Defillama

This disparity underscores a broader trend: centralized exchanges’ reliance on proprietary risk engines failed to contain the bleed, while DeFi’s transparent mechanics — bolstered by oracles like Chainlink — limited spillover to under 5% of total sector TVL.Qualitatively, the crash serves as a stark reminder of CEX opacity, where unverified solvency and algorithmic trading flaws turned geopolitical noise into systemic stress.

Hyperliquid HIP‑3: Permissionless Market Creation is Live

Hyperliquid activated HIP-3 on October 13, 2025, introducing permissionless perpetuals deployment that requires staking 500,000 HYPE (over $12M at current prices) to launch a custom “perp dex” on HyperCore.

This upgrade unlocks isolated margin trading for builder-deployed markets, with deployers capturing 50% of fees (set at 2x standard rates to maintain protocol revenue parity), potentially routing billions in new volume through Hyperliquid’s L1 infrastructure. At its core, HIP-3 democratizes market creation, allowing anyone meeting on-chain criteria to list assets beyond crypto natives — like pre-IPO equities, FX pairs, or indices, without centralized gatekeeping. Quantitative projections from protocol docs estimate that even 1% migration from traditional derivatives ($1.2 quadrillion notional) could balloon Hyperliquid’s perp volumes 10–20x from current $50 billion daily peaks.

Hyperliquid Historical Trading Volume Source: Hyperliquid

Kinetiq’s bonding pools mitigate the 500K HYPE hurdle, enabling smaller teams to crowdfund via LSTs. Projects like Ventuals (pre-IPO perps) and Liminal (delta-neutral strategies) have pre-committed, with BasedOneX already routing 1.5% of ecosystem volume ($20 million annualized) to custom frontends. The isolated margin cap at launch tempers systemic risks, though open-interest limits per market (initially $100 million) prevent overextension, drawing parallels to successful HIP-1 spot listings that added 150+ tokens.

Qualitatively, this shifts Hyperliquid from a perp DEX to infrastructure primitive, challenging CEX dominance. Early traction: $150 million in new OI across five deployer markets in day one, validates the model, but success hinges on frontend adoption and oracle reliability to avoid oracle divergences seen in prior stress events. HIP-3’s transparent slashing, burning stakes for validator lapses, bolsters trust, yet it underscores the protocol’s evolution toward a neutral venue where innovation scales without permission.