Onchain derivatives platform Paradex has refunded $650,000 to about 200 users after a maintenance-related software bug caused inadvertent liquidations in multiple markets.
According to Friday’s autopsy common on Paradex’s X platform, the incident occurred during Monday’s scheduled 30-minute database update, when “race conditions” caused corrupt market data to be written to the chain. Paradex said the issue is operational in nature and not the result of a hack or security breach.
In response, Paradex temporarily disabled access to the platform, canceled all open orders except take-profit and stop-loss orders, and reverted the chain to a snapshot taken before the start of the maintenance window.
Paradex is an onchain derivatives platform that allows investors to take leveraged perpetual positions while maintaining control of their funds, rather than depositing assets on a centralized exchange.
The incident was the first recall of Paradex Chain, which the exchange described as “an unwelcome but necessary action to protect users and restore network integrity.”
Paradex said it has implemented changes to prevent such reoccurrences, including updated service restart procedures, additional data validation checks, an improved scale-up process for full downtime service windows, and price band protections for post-trading periods.
Related: Expert warns that 80% of hacked crypto projects will never “fully recover”.
Trade disruptions caused by technical failures
Recent incidents highlight that operational and infrastructure failures, rather than hacks, can disrupt derivatives trading and access to the cryptocurrency market.
In October, decentralized exchange dYdX halted trading for about eight hours after a code order error and delayed Oracle restart led to trade mispricing and liquidation. The exchange announced a management vote to compensate affected traders with up to $462,000 from the protocol’s insurance fund.
Technical disruptions also affected customary derivatives markets. In November, the Chicago Mercantile Exchange (CME) halted trading for about 10 hours after a cooling failure at a CyrusOne data center in Illinois disrupted operations, prompting complaints from traders.
Internet infrastructure provider Cloudflare reported “internal service deterioration” in November. The issue disrupted access to the interfaces of several major cryptocurrency platforms, briefly preventing users from accessing exchanges, wallets and data dashboards.
The outage affected crypto companies such as Coinbase, Blockchain.com, BitMEX, Ledger, and DefiLlama.
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