By Prathik Desai, Token Dispatch; Compiler: Luke, Mars Finance. The screens went blank, and people were still unaware of what had happened. It was Monday, October 19, 1987. The Dow Jones Industrial Average plummeted over 22% in a single day. Phones fell silent, traders' words froze, and more than a fifth of the market value was wiped out. At the time, the market was still unfamiliar with the concept of "program trading," but the machines continued to sell even after the humans stopped. By the closing bell, $500 billion in value had vanished in the United States alone. Globally, the total evaporated reached $1.7 trillion. Adjusted for inflation, that figure would exceed $4.7 trillion today—more than the current GDP of Germany, the world's third-largest economy. That day gave rise to the circuit breaker—a pause button that not only helped correct prices but also bought the market time and slowed everything down. It was a mechanical solution to a human problem few knew how to solve: panic. Philosophically, the circuit breaker taught us a lesson: sometimes, the only way to survive chaos is to pause and take a breath. Nearly forty years later, I find myself staring at a smaller screen, surrounded by a different kind of silence. One Friday night, halfway through a bowl of snacks, a random episode of "The Big Bang Theory" paused mid-screen. For hours, notifications kept popping up: BTC down 3%... 7%... 10%. By the fifteenth minute, the chart looked like it was in free fall. This was after US President Donald Trump announced a new round of trade tariffs on China. That night, I didn't see any of the 10,000 movies I'd vowed to see. Instead, I watched $19 billion evaporate in real time. It was the worst liquidation in crypto history. Bitcoin plummeted from $122,000 to nearly $105,000. Many altcoins fared even more drastically. Traders in New York, Seoul, London, and Mumbai were making the same calculations, albeit in different time zones. The blockchain never sleeps, and neither do the traders. In 1987, a switch was built to slow panic. In 2025, we have a market that can't be turned off. This is what I've been thinking about lately: Can a market that inherently "never stops" justify a "pause button"? Circuit breakers were born from the idea that markets, like people, need a break. Black Monday in 1987 ushered in a series of revisions: thresholds, limits, and 15-minute pauses. Later, after the 2010 flash crash, regulators added limit-up/limit-down rules to prevent individual stocks from spiraling out of control. In March 2020, as the panic over COVID-19 gripped Wall Street, these rules were triggered four times in ten days, arguably preventing a stampede from turning into a run on the entire system. Each amendment relied on the same architecture: one exchange, one rulebook, and a unified clock. In crypto, we don't even have a unified clock, let alone a unified exchange. There's no opening or closing clock. If someone wanted to pull the plug, they wouldn't even be able to find one. While the tariff threat lit the fuse, the real fuel was the mountain of overheated long positions that had piled up over the past few weeks. In just a few hours, open interest dropped by nearly a third. In total, at least $19 billion in positions were forced to liquidate, mostly in long positions. In the stock market, this would trigger at least two trading halts and a restart auction. In crypto, it simply triggered panic among investors, who knew there was no "limit down" option to save them. They could only watch as crypto's worst liquidation event unfolded while the code continued to do what it was programmed to do. Every historic crash elicits the same instinctive reaction from the trading community: someone has to do something to prevent it from happening again. This expectation is entirely reasonable. Circuit breakers soothe traders, reduce vicious feedback loops, provide institutions with the comfort of rules, and buy all parties involved time to "respond" rather than "react." Therefore, when Evgeny Gaevoy, CEO of market maker Wintermute, advocates for the introduction of circuit breakers in the crypto space, we understand his motivation. But the bigger dilemma is: who should actually hit that "kill switch"? Introducing circuit breakers in the crypto world is both a technical nightmare and a philosophical intrusion. First, imagine a scenario: centralized exchanges (CEXs) like Coinbase and Binance implement circuit breakers to prevent extreme liquidations. While thousands of users on the CEX are locked out, thousands more on decentralized exchanges (DEXs) will continue to be liquidated. Second, given the promise of decentralization, isn't the entire point of the crypto market to ensure that no single person or authority can unilaterally decide when you can trade, stake, or exit? Doesn't introducing circuit breakers defeat the very purpose of cryptocurrency by introducing "permission" into a supposedly permissionless market? Traditional markets operate in a centralized manner, making coordinated "pauses" easy. But how do you coordinate across geographically dispersed CEXs around the world, not to mention DEXs that continue to operate with each new block? So what's the solution? Does this mean we have to "run naked" in the storm? I don't see an easy answer, but stronger "protections," rather than "permissions," may be part of the solution. Crypto markets already have some forms of protection in place. For example, mark-price liquidation logic prevents margin calls from being triggered by a single price falling below a required margin level. There's also dynamic margining and auto-deleveraging, which gradually reduce leverage rather than causing it to plummet. Another is auction-style spreads, which thicken liquidity when volatility spikes. These measures act as "checks," not "pauses." They also honor the ethos of decentralization because they rely on adaptive algorithms rather than authoritative intervention. DeFi has evolved and seen some unique forms of protection. The proposed ERC-7265 "circuit breaker" standard automatically slows withdrawals when outflows exceed a threshold. It provides lending protocols with an "emergency mode" that can freeze specific markets without freezing the entire system. I think they're still imperfect in terms of respecting the ethos of decentralization, but they demonstrate that security can be coded in without ceding absolute control. We've seen what happens every time someone tries to "pull the plug" in the crypto world. BitMEX's maintenance outage in March 2020 acted as an unexpected circuit breaker, likely preventing Bitcoin from falling below $3,500. But it also reminded everyone in the market that a single exchange could shut down what was once the world's largest crypto derivatives market. Solana's multiple validator-coordinated restarts, while preventing contagion, also undermined its decentralized narrative, a problem that continues to plague the chain. Every pause in crypto works in the moment but backfires later. This is because, in crypto, the first question on stakeholders' minds is always, "Who gave you the power?" So, in a crisis, how can we resist the urge to prioritize old instincts over new spirit? Traditional markets evolved to protect investors from each other, while cryptocurrencies were conceived as an antidote to the many problems plaguing traditional markets. The impulse to "pause" stems from the former, and while perhaps well-intentioned, it's the former. The trade-offs offered by borderless, permissionless markets are too alluring to resist. But it's precisely the fragility of this absolute freedom that drives this debate. The “middle way” might not lie in completely pausing the code, but in building in “speed bumps” through dynamic collateralization ratios, rolling auctions, and cross-venue etiquette. Hasty solutions, like partial halts on CEXs, only introduce new risks. Halt one exchange while another continues to trade. You can’t force a decentralized market to align with the whims and impulses of a few. Back in 1987, that event spawned circuit breakers, which ultimately saved the market from collapse countless times in the future. The crypto industry’s “business plan” is to build a market that can survive a crash. The challenge is to devise a way to achieve this without following the same path as traditional markets.
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