What Is the Risk of "Exchange Isolation" for a Single-Exchange Spot Price? ⎊ Path

What Is the Risk of “Exchange Isolation” for a Single-Exchange Spot Price?

Exchange isolation refers to a scenario where a single exchange's price becomes significantly disconnected from the broader market due to internal issues, network problems, or localized manipulation. Relying on this isolated Spot Price for derivatives settlement or liquidation creates a high risk of market abuse and unfair outcomes for traders, which is why multi-exchange Index Prices are standard.

How Does the “Last-Trade Price” on a Single Exchange Differ from the “Mark Price” on a Derivatives Platform?

How Do Cross-Exchange Arbitrageurs Profit from Price Isolation?

Why Is Data Latency a Risk When Using Oracles for Derivatives?

What Is a “Flash Crash” and How Does It Demonstrate the Risk of Exchange Isolation?

Why Do Exchanges Use a “Mark Price” Instead of the Last Traded Price for Liquidations?

How Does Price Manipulation Risk Increase without a Reliable Oracle?

How Does a Derivatives Exchange Use Multiple Oracles to Prevent Unfair Liquidation?

What Are the Risks Associated with Oracle Manipulation in DeFi?