Glitch on Paradex Exchange Plummets Bitcoin Price to Zero, Triggers Mass Liquidations

A recent database migration issue at Paradex, a decentralized trading exchange, led to an unusual event where the price of Bitcoin temporarily dropped to $0. This significant glitch caused a cascade of liquidations among users and necessitated a chain rollback to restore normal functionality.

Incident Overview

The issue began overnight, with reports from numerous users highlighting that Bitcoin’s price was displayed as $0 on Paradex. This problem arose after a malfunction during a database migration that affected the Paradex blockchain, block explorer, bridge, and API.

Timeline of Events

• 12:36 a.m. ET: An issue was first reported on the Paradex status page following multiple social media alerts about the liquidation cascade.
• 2:00 a.m. ET: Paradex identified the database issue and decided to roll back the blockchain state to block 1604710, which was the last known correct state.
• 5:00 a.m. ET: The exchange confirmed that all user funds were safe as they continued the recovery process.
• 5:16 a.m. ET: An update on the status page assured users that their funds were “SAFU” (safe).

Impact on Liquidations

During the chaotic period, liquidations surged significantly. Though exact figures from the event are still unclear, it was reported that over $875 million in liquidations occurred within 24 hours. Bitcoin alone accounted for an estimated $234 million.

Market Performance

This glitch came after Bitcoin faced a volatile trading period, dropping from a price above $95,000 to around $92,284. The cryptocurrency experienced a 2% decline, which impacted its weekly gains, now at approximately 1.4%. Recently, Bitcoin was trading at around $93,318.

Exchange Recovery Status

As of now, Paradex has restored its services and confirmed that all operations are functioning normally. The exchange has managed to ensure the safety of user funds during this troubling incident. According to data from DeFiLlama, Paradex holds around $641 million in open interest and has processed about $37 billion in trading volume over the last 30 days.

This incident highlights the challenges and risks associated with trading on decentralized exchanges and the importance of robust technical oversight in blockchain operations.