Paradex compensates $650,000 following a critical system error

UnluckyMiner · 2026-01-31T04:13:01+00:00

Paradex responded quickly to a maintenance error that affected 200 traders, offering $650,000 in compensation after corrupted data caused involuntary liquidations. The incident highlights the challenges of managing decentralized trading platforms.

UnluckyMiner

2026-01-31 04:13:01

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In a challenging situation for users, Paradex took urgent remedial measures after a maintenance error affected approximately 200 traders. According to information from PANews, the compensation plans include returning $650,000 to those severely impacted by the incident. The highlighted event demonstrates the challenges involved in managing complex decentralized trading platforms.

What happened during the system update

On January 19, during a scheduled database update expected to last 30 minutes, a synchronization error occurred, leading to unintended consequences. The technical issue was caused by a race condition — a situation where the order of data processing interacted unexpectedly during critical operations. Due to this timing error, the system saved corrupted data to the cloud and published it on Paradex Chain before the problem was detected.

Chain of issues that triggered liquidations

The impact of the error quickly propagated through the platform. Corrupted data caused the reset of market funding indices to zero, cascading into a series of involuntary liquidations across multiple trading markets. Users experienced abnormal gains and losses on their positions, and the liquidation system was activated based on distorted information.

Emergency measures and compensation

In response to this systemic error, Paradex took several protective actions. The development team temporarily suspended access to the platform to prevent further damage. Subsequently, they canceled open orders (except for profit and stop-loss orders that protected users) and restored a snapshot of data taken before the maintenance window was triggered, returning the system to a functional state.

To compensate for the damages incurred, Paradex announced the return of $650,000 distributed to the 200 affected users. This decision reflects the platform’s commitment to take responsibility and restore community trust. The incident underscores the importance of rigorous testing and risk management in the decentralized application ecosystem, where a single coordination error can impact hundreds of users.

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