- Paradex will roll back transactions after an error caused thosands of liquidations.
- User funds are safe, a message on the project's website said.
- The incident has shaken investor confidence.
Paradex will roll back thousands of transactions after an error caused prices on the perpetual futures exchange to fall to zero, resulting in mass liquidations.
Shortly after the platform conducted maintenance at around 4:30am London time, thousands of trades on the platform were liquidated in a matter of seconds, social media reports and videos viewed by DL News showed.
Three hours later, Clement Ho, Paradex’s director of engineering, addressed panicked users in a Discord post.
“We have identified the issue and will be rolling back chain state to block 1604710 (4:27:54 UTC),” he said. “This is the time before the DB maintenance and is the last known correct state.”
“Recovery efforts are ongoing. We can confirm that all user funds are SAFU,” a message on the Paradex website said.
It’s not clear how many users were affected by the error, nor the value of the funds liquidated. Paradex shut down access to its block explorer shortly after the mass liquidations occurred.
But the exchange processed almost $1.6 billion worth of trades the day prior, according to DefiLlama data, while CoinGecko reported $652 million worth of open interest over the past 24 hours.
Shaken confidence
Rollbacks are usually a last resort for blockchain projects as they undermine the core purpose of the technology: to provide a single, consistent, and immutable shared ledger of transactions.
This incident has shaken investor confidence in Paradex, which aims to provide a zero-fee perps trading with deep liquidity and privacy.
The platform is incubated by Paradigm, the institutional crypto derivatives liquidity network, not the venture firm of the same name. In 2021, Paradigm raised $35 million at a $400 million valuation from investors including Jump Capital, Alameda Ventures, Genesis, and Nexo.
Paradex is not the first perp exchange to encounter issues in recent months.
Hyperliquid, the biggest perps exchange by 30-day trading volume, has lost tens of millions of dollars over the past year after its markets were attacked by large traders.
In August, a trader inflated the value of futures contracts for the XPL token by 200%, netting $15 million and inflicting heavy losses for other traders.
It’s not yet clear when users with funds trapped on Paradex will be able to access them again.
“Due to the complexity of the recovery process, we do not have a confirmed ETA at this time,” Paradex said. “We will provide further updates as they become available.”
Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.
