◇ GLOSSARY
Contagion
Spillover of stress from one market, venue, or balance sheet into unrelated positions. In perps, depegs, lender failures, and cross-margin books can move mark on assets you never traded as forced sellers hit every liquid book.
Contagion is why perp traders watch TradFi and crypto credit simultaneously. Luna's UST depeg did not stay on Terra; ETH perps on major venues saw funding flip and liquidations rise as collateral chains broke. Celsius and 3AC forced sales hit BTC mark even for accounts with no exposure to those names.
On-chain perp DEXs are not immune. Oracle feeds still lean on CEX spot; when CEXs gap, marks gap. Contagion is a plumbing problem as much as a narrative one.
Diversifying across coins helps less than diversifying across margin mode, venue, and collateral type. One insolvent lender's cross-margin unwind can be your liquidation if you share the same order book.