Paradex Causes User Collateral with $650,000 Refund Program

Paradex, a decentralized trading platform, confirms that a technical malfunction caused significant losses to 200 users. As a form of accountability, the platform has allocated a compensation package worth $650,000 to address the impact of the incident that occurred on January 19.

Maintenance Disruption Causes Domino Effect in Ecosystem

The issue began when Paradex carried out a scheduled database upgrade operation lasting 30 minutes. During this critical phase, an unexpected condition arose: a data access race condition that caused program instructions to execute in the wrong order. This phenomenon resulted in corrupted data being stored in the cloud system and subsequently broadcasted to Paradex Chain.

The immediate consequence of this technical problem was that several market funding indices were spontaneously reset to zero. This abnormality created completely inaccurate profit-loss calculations, triggering automatic liquidation processes across multiple trading markets simultaneously.

Response Mechanism: Data Recovery and Order Cancellation

Facing this crisis, Paradex quickly activated emergency mitigation protocols. The platform suspended user access to prevent further losses, canceled all open orders except for pre-set take-profit and stop-loss orders. The technical team then performed a blockchain rollback to a snapshot taken before the maintenance window began, effectively removing all effects of the technical incident.

This action restored the chain status to a healthy condition, although users still faced losses from the brief period when corrupted data was broadcasted.

Compensation Commitment and Lessons Learned from the Incident

As recognition of the impact on users, Paradex allocated $650,000 in compensation funds for 200 affected accounts. This initiative reflects the platform’s commitment to user protection and operational accountability.

This incident provides an important lesson on the importance of strict quality assurance in blockchain infrastructure operations, especially when involving critical database operations that pose systemic risks if not managed perfectly.