Gauntlet CEO Tarun Chitra on Why Exchange ADL Mechanisms Need an Update

In episode 10 of The Big Brain Podcast, Larry and Namik are joined by Gauntlet founder and CEO Tarun Chitra. Tarun recounts how an unexpected ADL event on a tiny test position pushed him to research how exchanges handle insolvency when liquidations fail, especially after October 10th. He argues the common ranking approach concentrates losses unfairly and may overshoot during cascading events. The discussion also covers transparency, insurance funds, and why improving these systems matters if perp exchanges want to onboard new users.

OUTLINE

00:00:00 - Introduction

00:00:54 - Tarun’s background

00:10:50 - Tarun's ADL paper

00:15:40 - ADL usage

00:26:25 - Transparency gap

00:31:44 - Critiques of Tarun's paper

00:36:32 - Impact of Tarun's paper

00:41:09 - Potential fixes

00:45:31 - Cult-like communities in crypto

00:52:42 - 10x verticals looking ahead