What the October 2025 Flash Crash Taught Us About Liquidations — And Why DeFi Needs Better Fail-Safe

This story was originally published on HackerNoon at: https://hackernoon.com/what-the-october-2025-flash-crash-taught-us-about-liquidations-and-why-defi-needs-better-fail-safe. DeFi’s October 2025 flash crash exposed critical weaknesses in liquidation models. Michael Egorov analyzes what broke, what worked, and how DeFi must evolve. Check more stories related to web3 at: https://hackernoon.com/c/web3. You can also check exclusive content about #defi, #cefi, #risk-management, #ethereum, #crypto-volatility, #october-2025-flash-crash, #defi-needs-better-fail-safe, #hackernoon-top-story, and more. This story was written by: @michaelegorov. Learn more about this writer by checking @michaelegorov's about page, and for more stories, please visit hackernoon.com. The crash of October 10, 2025 was a stress test that exposed what weaknesses still remain in the crypto industry. The wipeout also validated some of the principles that many of us have been pushing for years. Centralized exchanges showed signs of strain as cascading liquidations raced ahead of human decision-making. Users have very little insight or control over how any of the decisions get made.