Decentralized exchange Trade.xyz will cover losses from a single trade that crashed its SK Hynix perpetual, attributing the move to thin pre-market liquidity.
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Decentralized perpetuals exchange Trade.xyz said it will reimburse traders liquidated when its SK Hynix perpetual futures contract crashed 19% late on Monday. The company attributes the loss to a single executed trade on a thin Korean pre-market venue rather than any failure in its systems.
The mark price, the reference figure used to calculate profits and losses, fell from about $1,128 to $917 at 23:01 UTC on July 27, according to the company. The print came from an executed trade relayed by multiple independent data providers. The data point feeding the contract was tracking what Trade.xyz called the primary Korean pre-market venue.
“The oracle system worked as intended according to its specification,” the company said. Nothing malfunctioned and nobody manipulated anything, on the evidence so far.
The oracle, a tool that fetches data from outside points to within a blockchain-based system, faithfully reported a real trade on a market thin enough that one order moved the price nearly a fifth. The contract liquidated positions accordingly.
Trade.xyz said covering the losses is a one-time discretionary decision, not a commitment to do so again. Eligibility rules will follow, and payouts are expected within days.
The remedy it outlined is the more consequential part. The company said it is revisiting its assumptions about external venues and will weigh price formation on its own orderbooks, “which carry increasingly meaningful depth and signal in relation to external sources.”
Research into crypto market structure has found the same pattern in bitcoin and ether, where perpetual futures often lead spot rather than follow it. Pre-IPO perpetuals priced SpaceX’s first trading day more accurately than the bookbuild that set the offering.
The crash printed hours before Korean equities began a record two-day decline. SK Hynix shares fell about 17% on Wednesday after quarterly profit rose 557% and still missed estimates.
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