Paradex Refunds $650K After Maintenance Bug Triggers Liquidations

Onchain derivatives platform Paradex refunded $650,000 to about 200 users after a maintenance-related software error triggered unintended liquidations across multiple markets.

According to a Friday post-mortem shared on X by Paradex, the incident occurred during a planned 30-minute database upgrade on Monday, when a “race condition” caused corrupted market data to be written onchain. Paradex said the issue was operational 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 rolled back the chain to a snapshot taken before the maintenance window began. 

Paradex is an onchain derivatives platform that lets traders take leveraged perpetual positions while keeping control of their funds, rather than depositing assets with a centralized exchange.

The incident marked the first rollback of Paradex Chain, which the exchange described as “an undesired but necessary action to protect users and restore network integrity.”

Paradex said it has implemented changes to prevent a recurrence, including updated service restart procedures, additional data validation checks, a revised scale-up process for full-downtime maintenance windows and price-band protections during post-only trading periods.

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Trading disruptions driven by technical failures

Recent incidents highlight how operational and infrastructure failures, rather than hacks, can disrupt derivatives trading and crypto market access.

In October, decentralized exchange dYdX paused trading for about eight hours after a code-ordering error and delayed oracle restarts led to mispriced trading and liquidations. The exchange put forth a governance vote on compensating affected traders with 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 about 10 hours after a cooling failure at a CyrusOne data center in Illinois disrupted operations, triggering complaints from traders. 

Internet infrastructure provider Cloudflare reported an “internal service degradation” in November. The issue disrupted access to the front ends of several major cryptocurrency platforms, briefly preventing users from reaching exchanges, wallets and data dashboards. 

The outage affected crypto companies such as Coinbase, Blockchain.com, BitMEX, Ledger and DefiLlama.

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