Paradex will refund $650,000 in liquidated damages
On-chain derivatives platform Paradex has issued $650,000 in refunds to about 200 users after a maintenance-related software bug led to unintended liquidations on several markets.
According to a Friday obituary shared by Paradex on Xx, the incident occurred during a scheduled 30-minute database update on Monday, when a “seed condition” caused corrupt market data to be written to the chain. Paradex says the issue is operational and not due to hacking or a security breach.
In response, Paradex temporarily disabled access to the platform, canceled all open orders except profit and loss orders, and returned the chain, which was taken before the maintenance window began.
Paradex is an onchain derivatives platform that allows traders to hold sustainable fixed positions while managing their funds instead of depositing them on a centralized exchange.
The incident marked Paradex Chain's first recovery, which the exchange described as an “unintended but necessary step to protect users and restore network integrity.”
Paradex said it has implemented changes to prevent a reoccurrence, including updated service reset procedures, additional data validation checks, enhanced upgrade process full-time maintenance windows and price band protection during post-only trading periods.
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Transaction interruptions caused by technical failures
Recent events show how operational and infrastructure failures, rather than hacks, can disrupt derivatives trading and access to the crypto market.
In October, decentralized exchange dYdX halted trading for eight hours after a code order error and a delayed verbal order error. The exchange also voted administration to compensate affected traders up to $462,000 from the protocol's insurance fund.
Technical disruptions have also affected traditional derivatives markets. In November, the Chicago Mercantile Exchange (CME) halted trading for 10 hours after a cooling problem at a CyrusOne data center in Illinois disrupted operations, sparking protests from traders.
Internet infrastructure provider Cloudflare reported an “internal service outage” in November. The issue disrupted front-end access to several major cryptocurrency platforms, briefly denying users access to exchanges, wallets and dashboards.
The outage affected crypto companies such as Coinbase, Blockchain.com, BitMEX, Ledger and Defillama.
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