ACT flash crash revelation

BN contract rule adjustments triggered a flash crash of ACT and other meme coins: an "April Fool's Day scare" that exposed the structural crisis of the crypto market.
On April 1st, BN announced a reduction in contract leverage and position limits for low market cap tokens such as ACT (for example, the position limit for ACT was reduced from 4.5 million to 3.5 million USD). After the rules took effect at 18:30 that day, ACT plummeted 55% within 36 minutes, while tokens like TST and DEXE also experienced a flash crash of 20%-50%. The total liquidation across the network exceeded 8.7 million USD.

Core of the Controversy: The Conflict Between Risk Control Mechanisms and Market Realities
1. Forced liquidation triggers a death spiral
After the rule adjustment, users who did not actively reduce their positions were forcibly liquidated by the system at market price, leading to concentrated selling pressure that caused a price collapse. The evaporation of 75% of the ACT contract's open interest is difficult to explain by "spot selling"; the market speculates that the main reason is that market makers were forced to exit due to insufficient margin.
2. Market Maker Algorithm Strategy Failure
Wintermute is suspected of selling tokens after a flash crash. Although its founder denies manipulating the market, he admits to engaging in AMM arbitrage. Analysts point out that market makers rely on high leverage to maintain liquidity, and changes in regulations directly impact their profit model, triggering a chain reaction.
3. Data contradictions undermine the credibility of explanations.
Among the tokens adjusted in the same batch, MEW rose instead of falling, while DEXE, which was not on the list, experienced a flash crash;
The prices of multiple currencies precisely synchronized and dropped at 18:30, far exceeding the normal market fluctuation range.

The fatal flaw of the Meme coin ecosystem
1. Liquidity Vulnerability
Low market cap tokens have weak depth, and a small amount of capital can trigger a huge shock. The chain of transmission from rule adjustments → market makers withdrawing → liquidity drying up → panic selling reveals the real paradox of "decentralized vision, centralized risk."
2. The illusion of value support shatters
After the market sentiment retreats, Meme coins are extremely sensitive to liquidity changes. This incident confirms that their price is still dominated by leverage games and chip games, and any external disturbance may trigger a flash crash.
3. Imbalance of Power Structure
Exchanges, market makers, and whales build a sophisticated system through rules and algorithms, leaving retail investors as the objects of risk transfer. The "responsibility segmentation" among all parties after the crash highlights the harsh reality of unequal rights and responsibilities within the ecosystem.

Industry Insight: Restructuring the Risk Defense System
1. Exchange risk control needs to balance security and market sensitivity.
Preventive measures should establish a dynamic assessment mechanism to avoid "over-defense" that could trigger new crises. Parameter adjustments need to provide early warnings to reduce the impact of forced liquidation.
2. Market maker algorithms urgently need pressure-resistant upgrades
High leverage strategies need to incorporate extreme market circuit breaker mechanisms, develop adaptive liquidity management models, and prevent single point failures from triggering systemic crashes.
3. Investor education is urgent.
Retail investors need to recognize the high-risk nature of low market cap tokens, avoid excessive leverage and concentrated positions, and be wary of the hidden risks behind rule changes.

This is a risk textbook with no winners.
This flash crash did not have a clear "culprit", but it revealed the most genuine survival rules of the crypto market: in the battleground of liquidity, algorithms, and human nature, systemic risks are often triggered by the weakest links. When the defense mechanism itself becomes a source of volatility, the industry urgently needs to shift from barbaric growth to resilience building. For retail investors, self-protection is always the primary survival skill in an institution-led game.