TL;DR

The promising “Uptober” rally was abruptly cut short by a sudden macro shock, triggering a sharp, market-wide sell-off and deleveraging event. On Typus, trading volume settled at a high of ~$20.5 million amidst the turmoil. Traders were caught in the downdraft, booking a -$72.5K loss and reversing last week’s gains. In a strong defensive showing, the TLP token’s -10.99% return significantly outperformed its underlying asset basket’s -12.56% decline. Open Interest collapsed by over 75%, signaling a major market reset.

Macro Shock Ends “Uptober” Rally, Triggers Deleveraging

The sustainable foundation for the “Uptober” rally noted in last week’s report was shattered this week by an external macroeconomic shock. The prevailing market narrative points to an unexpected US tariff announcement, which triggered a classic risk-off wave across global markets and ignited a significant deleveraging event in crypto. This was a market structure event, where built-up leverage was cleared out by a macro catalyst. This sudden fear was reflected in the derivatives market, with Bitcoin’s Implied Volatility (DVOL) spiking from 39% to 46% over the weekend.

On Typus, this translated into a complex activity pattern. While total trading volume decreased by 34.2% to ~$20.5 million from last week’s anomalous high, average Daily Active Users (DAU) surprisingly increased by 18.6%. This suggests that while overall trading activity cooled, existing users were highly engaged in monitoring and managing their positions during the crash.

LPs Showcase Strong Defense in Market Crash

This week provided a powerful demonstration of the TLP’s defensive value for LPs. In a market where the underlying asset basket crashed by -12.56%, the TLP token itself performed significantly better, with its value decreasing by only -10.99%.

This +1.57% of “alpha,” or outperformance, was a direct result of the TLP capturing the -$72.5K in realized losses from traders. This mechanic allowed the TLP to offset a portion of the asset depreciation, protecting LP capital during the downturn. TLP fees also saw a significant increase of 42.2% due to the volatile conditions.

TLP vs. SUI: A 30-Day Performance Deep Dive

The 30-day performance data, which includes this week’s crash, provides a stark illustration of the TLP’s defensive strength. Over the past month, the TLP Stake strategy returned +9.53% and the standard TLP returned +8.48%. Both massively outperformed holding SUI spot, which would have resulted in a -10.42% loss. The Sharpe Ratios confirm this, indicating vastly superior risk-adjusted returns for the TLP strategies during this volatile period.

Traders Caught in Crash, Reversing Recent Gains

After a profitable prior week, traders were caught on the wrong side of the macro-driven sell-off. The sharp market reversal resulted in a heavy realized loss of -$72.5K. This wiped out recent gains and served as a powerful reminder of the risks of a market sensitive to external shocks.

Open Interest Collapses in Major Deleveraging

The most significant event on the platform this week was the massive flush of leverage. Total Open Interest collapsed by over 75%, falling from last week’s stable ~$552K level to just ~$129K this week. This signals a major reset of speculative froth and a return to a more cautious market environment after the forced deleveraging.

Overall, the week was a painful but healthy structural reset for the crypto market. While challenging for traders, it served as a powerful validation of the TLP’s design for LPs, who were rewarded with significant downside protection during extreme volatility. The flushed leverage now creates a cleaner foundation for the market’s next directional move.