Q: Can you explain what deeper and more stable liquidity contracts on Binance are doing to make the system more stable?
A: Below I will explain with "mechanisms you can directly imagine": What upgrades has Binance made in the past two years → to make the liquidity of perpetual contracts "deeper and more stable", making this year's "air force hell pool" more common.
This is not an official advertisement, but the truth widely known among internal traders in the market.
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⭐ 1. Binance expanded the Market Maker Program.
This is the most core change.
Binance provides:
Rebate
Negative transaction fees (maker -0.01% / -0.02%)
Higher API bandwidth (can place/cancel orders faster)
Higher weight / Less throttling (less 'choking')
Market makers gain:
Lower cost
Faster speed
Can accommodate larger depth (thick buy/sell walls)
=> Result: The buy and sell orders of the perpetual contract are 'as thick as a stone wall'
(Retail leverage trading cannot move it at all)
This greatly reduces the chance of 'violent decoupling' of perpetual prices.
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⭐ 2. The system launched 'Contract Depth Sharing' and Auto-Hedging
Binance has a key mechanism (not widely announced externally):
> The counterparty of perpetual contracts comes partly from market makers' 'external liquidity' and hedge pools.
Simply put:
Market makers have a large amount of spot and perpetual positions in external exchanges/spot pools
When Binance's perpetual price may decouple
→ The system will introduce market makers' hedge orders
→ Short-term pull back the decoupling
You can think of it as:
Market makers connect their 'deep-sea reservoirs' to the Binance perpetual market.
→ Making it difficult for perpetual prices to fly too high or drop too deep
→ Funding rates are more stable
→ Price differences are easier for arbitrageurs to exploit
→ Completely form a stable ecosystem
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⭐ 3. Binance locks the contract with the 'Marked Price' to avoid being pulled by bears or bulls
The settlement price of Binance perpetuals is not the price of the perpetual itself.
It will use:
Index Price + Denosing Algorithm (Anti-manipulation)
This means:
You opened a 10 million short position in perpetual
Perpetual prices may drop, but the marked price may not drop with you
You cannot forcibly collapse the entire market relying on contracts
Conversely, the bulls cannot pull the market up.
So:
✔ The more violent the perpetual market,
✔ The less likely it is to really hit the spot price.
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⭐ 4. Binance upgraded the 'Depth Control Algorithm'—automatically balancing both sides' depth
Simply put:
Binance's matching engine will automatically control the following content according to market pressure:
Minimum order step (Tick Size)
Minimum unit
Depth requirements (depth checks)
Minimum liquidity threshold for market makers
What it means is:
> Binance now automatically requires market makers to maintain a certain 'balanced depth.'
For example:
Buy depth is too thin → The system reminds market makers to replenish orders
Sell depth is eaten away → The system accelerates the introduction of external liquidity
During major market movements → The system forcibly increases depth requirements
This will cause the results you see:
✔ Perpetual price volatility is small
✔ Thick depth
✔ Retail investors opening shorts/longs cannot 'touch the real price'
✔ Perpetual and spot are not easy to decouple
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⭐ 5. Binance upgraded the high-frequency matching engine → Large holders find it difficult to pull depth
In earlier years, the perpetual market would see:
Eat a large piece of depth
A needle driving the price down
Decoupling of perpetuals by a few hundred points
But after Binance upgraded the matching engine:
Depth is eaten → immediately replenished
Matching speed is very fast (world-class speed)
Prices are as stable as CME futures
The result is:
✔ The more 'like a formal futures market' the perpetual becomes
✔ Will not be easily pulled by retail investors or large holders
✔ Negative funding rates have the opportunity to exist stably in the long term
Retail perpetual shorts (or longs) cannot push out the 'real trend', no matter how large the leverage.
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⭐ 6. Low circulation in the spot market → Spots are easier for market makers to control
This point is very important.
New coins listed in 2024～2025:
Circulating supply is low (below 10%)
Liquidity is controlled by market makers
Spot orders are concentrated on 'market makers' rather than retail investors
Therefore:
The spot market is tightly controlled by market makers
On the perpetual side, even with a large number of short positions, they cannot touch the spot
The price of perpetuals becomes 'retail sentiment'
Spot becomes 'market maker pricing'
This is what you see:
The more the bears short, the harder the spot becomes.
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⭐ 7. Binance provides 'a perfect arbitrage environment' for market makers, allowing the market to automatically return to balance
The current mode of arbitrageurs:
Buy spots
Short perpetual
Bear the funding rate
Revert the price difference
Because:
Binance matches faster
Depth is more stable
Price differences are not easy to run away
Much lower risk
So:
The more arbitrageurs there are → the less the perpetual will decouple from the spot.
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⭐ Summary (the easiest to understand version)
Binance has clearly done the following things in the past two years:
✔ 1. Find more market makers, provide better conditions
→ Guarantee perpetual depth is always very thick
✔ 2. Connect to external liquidity from market makers
→ Prevent excessive decoupling of perpetuals
✔ 3. Improve marked price algorithm
→ Do not let one-sided leverage ruin the market
✔ 4. Matching engine upgrade + automatic forced depth balancing
→ Perpetual contracts have become as stable as CME
✔ 5. Small coins have low spot circulation, making it easy for market makers to control
→ Spot prices are easier to maintain
Final result:
> Extreme sentiment in perpetuals (bears going crazy)
But the spot price remains as solid as a rock
Long-term negative funding rates
Market makers + arbitrageurs steadily harvest the spread
This is the reason you see 'a large number of bear hell pools this year'