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Crypto Glitch: Bitcoin Priced at $0, Users Liquidated
20 Jan
Summary
- A technical glitch on Paradex briefly set Bitcoin's price to $0.
- The bug led to widespread, unwarranted liquidations on the perpetuals exchange.
- Paradex plans to rollback its database to reverse the faulty transactions.
A technical malfunction on the decentralized crypto exchange Paradex, an appchain on Starknet, led to Bitcoin being incorrectly valued at $0. This erroneous pricing resulted in a large number of unwarranted liquidations, as Paradex operates as a perpetuals exchange where trades are leveraged perpetual futures contracts. The incident occurred during routine database maintenance, prompting the exchange's team to plan a state rollback.
The team behind Paradex has stated that all user funds are secure and intends to reverse all transactions that occurred due to the false market data. While the exact number of affected users and liquidations remains unclear, the exchange has averaged over $1 billion in daily trading volume recently. Trading on Paradex is currently suspended until the rollback is completed, with no estimated time for resumption.
This event highlights ongoing concerns about decentralization within the DeFi sector, as rollbacks and interventions are often seen as signs of centralization. Similar incidents, including hacks and infrastructure outages, have previously impacted user trust and accessibility in decentralized finance. The situation at Paradex underscores the challenges in maintaining security and reliability in DeFi applications.
