First Principles Ep. 5 with Paul Milgrom One of the most important auction designs in modern history was sold to the FCC on a 3.5-inch disk. Nobel Prize winner Paul Milgrom on auctions, price discovery, and how mechanism design became real-world infrastructure — from spectrum auctions to DeFi. Hosted by @Tim_Roughgarden with @skominers. 00:00 Intro: economics assumptions that are “just wrong” 02:19 Scott Kominers and Tim Roughgarden on the genius of Paul Milgrom 05:35 An intro to the  Glosten-Milgrom model: The paper that created entire fields of economics 07:48 The auction theory breakthroughs of the 1980s 17:15 Why market microstructure matters for DeFi 24:17 When math teaches economics something new 32:38 How theory became spectrum auction design 36:22 The floppy disk that helped convince the FCC 41:05 What changed when auctions moved online 45:28 The auction that reorganized television 1:07:30 What economics and computer science can learn from each other 1:13:22 Futures markets for compute 1:15:12 Paul Milgrom’s advice for builders

No complexity. No accident. 10/10 was caused by irresponsible marketing campaigns by certain companies. On October 10, tens of billions of dollars were liquidated. As CEO of OKX, we observed clearly that the crypto market’s microstructure fundamentally changed after that day. Many industry participants believe the damage was more severe than the FTX collapse. Since then, there has been extensive discussion about why it happened and how to prevent a recurrence. The root causes are not difficult to identify. ⸻ What actually happened 1.Binance launched a temporary user-acquisition campaign offering 12% APY on USDe, while allowing USDe to be used as collateral with the same treatment as USDT and USDC, and without effective limits. 2.USDe is a tokenized hedge fund product. Ethena raises capital via a so-called “stablecoin,” deploys it into index arbitrage and algorithmic trading strategies, and tokenizes the resulting fund. The token can then be deposited on exchanges to earn yield. 3.USDe is fundamentally different from products such as BlackRock BUIDL and Franklin Templeton BENJI, which are tokenized money market funds with low-risk profiles. USDe, by contrast, embeds hedge-fund-level risk. This difference is structural, not cosmetic. 4.Binance users were encouraged to convert USDT and USDC into USDe to earn attractive yields, without sufficient emphasis on the underlying risks. From a user’s perspective, trading with USDe appeared no different from trading with traditional stablecoins—while the actual risk profile was materially higher. 5.Risk escalated further as users: •converted USDT/USDC into USDe, •used USDe as collateral to borrow USDT, •converted the borrowed USDT back into USDe, •and repeated the cycle. This leverage loop produced artificial APYs of 24%, 36%, and even 70%+, widely perceived as “low risk” simply because they were offered by a major platform. Systemic risk accumulated rapidly across the global crypto market. that point, even a small market shock was sufficient to trigger a collapse. When volatility hit, USDe depegged quickly. Cascading liquidations followed, and weaknesses in risk management around assets such as WETH and BNSOL further amplified the crash. Some tokens briefly traded near zero. The damage to global users and companies—including OKX customers—was severe, and recovery will take time. ⸻ Why this matters I am discussing the root cause, not assigning blame or launching an attack on Binance. Speaking openly about systemic risks is sometimes uncomfortable, but it is necessary if the industry is to mature responsibly. I expect there may be significant misinformation and coordinated FUD directed at OKX in the near future. Even so, speaking honestly about systemic risk is the right thing to do—and we will continue to do so. As the largest global platform, Binance has outsized influence—and corresponding responsibility—as an industry leader. Long-term trust in crypto cannot be built on short-term yield games, excessive leverage, or marketing practices that obscure risk. The industry needs leaders who prioritize market stability, transparency, and responsible innovation—not a winner-take-all mentality where criticism is treated as hostility. Crypto is still early. What we choose to normalize today will determine whether this industry earns lasting trust—or repeats the same mistakes again.

Three signals in the perp space are playing out with real numbers. Signal 1: Prediction markets and perpetuals are converging. In late April, two leading prediction platforms announced perpetual futures on the same day. Meanwhile, on-chain exchanges added prediction market primitives to their matching engines. This isn't two industries anymore—it's one unified trading layer. Prediction market volume already exceeds $21B monthly. Add leverage and 24/7 liquidity, and the combined use case changes everything. Signal 2: On-chain position transparency has shifted from "feature" to "standard." On-chain perp volume hit $6.7 trillion in 2025, up 346% YoY. While centralized venues saw open interest drop 20.8%, on-chain OI surged 229.6%. Capital is voting with its feet—not for more leverage, but for verifiable, auditable positions where margin sits in smart contracts, not on corporate balance sheets. Signal 3: High-performance chain derivatives ecosystems are exploding. One leading chain processed $65B in perp volume in a single month last October. Its aggregator's perpetual product alone handled $250B+ in annual volume. New block-assembly infrastructure now enables on-chain orderbook quality that rivals traditional venues, with multiple native perp protocols launching this year. This isn't one product winning. It's microstructural evolution. Three signals, one direction: trading infrastructure is evolving from fragmented tools into a unified, transparent, 24/7 market layer. This is why @SunX_DEX built for 24/7 multi-asset perpetuals from day one. Not because the wind shifted, but because the foundation was poured in this direction. Convergence, transparency, high-performance derivatives—these aren't 2026 revelations. They were architectural assumptions from the start. Now the market is validating them. The next step is letting the product speak in numbers. #PerpDex# #SunX#