A second flash crash on South Korea's Nextrade exchange hit SK Hynix, renewing concerns over oracle reliability for crypto perpetuals tied to equities.
A glitch on South Korea's alternative stock exchange briefly erased nearly a third of SK Hynix's market value on paper Thursday, the second such incident in two weeks. The episode renewed concerns about the reliability of price feeds that connect traditional equities with crypto perpetual futures.
At 8 a.m. local time, just 11 shares of the memory chip giant changed hands on Nextrade at 1,168,000 won ($840) each. That price was about 30% below the previous close on the Korea Exchange, triggering a volatility interruption. The stock quickly recovered, ending Nextrade's 50-minute pre-market session down about 2%.
The move mirrored a similar episode on July 28, when another small trade on Nextrade caused SK Hynix's price to briefly fall by the daily limit. That earlier glitch hit Hyperliquid, a crypto derivatives platform that offers a perpetual contract tracking the stock. The derivative plunged roughly 20% within seconds, diverging sharply from prices on other venues.
On-chain data showed the July incident triggered liquidations across more than 900 leveraged accounts, with nearly $60 million in positions wiped out and approximately $17.4 million in realized losses. Hyperliquid later said it would compensate affected traders and review how external equity prices are incorporated into its pricing system.
Thursday's repeat did not trigger a similar wave of crypto liquidations – total liquidations across the market stood at about $245 million over the past 24 hours – but it highlighted a structural weakness. Crypto perpetual contracts rely on price feeds, often called oracles, to bring external market data onto blockchain platforms. In this case, Hyperliquid's system incorporated a Nextrade price even though the move was based on a limited number of shares.
The episode renewed questions over whether equity-linked crypto derivatives should depend on a single trading venue, particularly one with limited liquidity. Thinly traded exchanges may not always provide reliable pricing data for products that can trigger large-scale liquidations.
Nextrade, launched last year as a lower-cost alternative to the Korea Exchange with extended trading hours, uses a single price source rather than data from multiple venues. The company says this approach is common among alternative exchanges. Critics warn it can leave markets vulnerable to sharp moves caused by thin trading activity.
With SK Hynix becoming a key indicator of AI chip demand and a popular asset for leveraged crypto trading, another flash crash could push exchanges to reconsider how they source prices for equity-linked perpetual contracts. For context on the broader crypto market dynamics, the incident underscores the intersection of traditional finance and digital asset infrastructure.
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