DeFi Liquidations Expose Persistent Market Misconceptions
October's cascade of decentralized finance liquidations revealed a troubling pattern: many participants still fundamentally misunderstand leverage mechanics. The events demonstrated how DeFi's structural innovations—while transformative for transaction governance—cannot circumvent Core market realities.
Platforms may eliminate intermediaries, but they don't erase the laws of financial physics. Liquidations struck particularly hard among traders who mistook protocol design for risk elimination. "People still seem to believe in magic," the analysis notes, highlighting the gap between DeFi's technical capabilities and user expectations.
The sector's true breakthrough lies in responsibility redistribution, not payoff alchemy. While democratizing access, decentralized systems ultimately enforce the same economic constraints as traditional markets—just through different mechanisms.
