Trade.xyz to Compensate Traders After $60 Million Crypto Liquidation

Company Responds to 19% Price Drop Triggered by Significant Trade

Trade.xyz, a decentralized perpetuals exchange, has announced plans to compensate traders impacted by a significant liquidation event resulting from a 19% drop in its SK Hynix perpetual futures contract. This decline was reportedly caused by a single large trade executed on a low-volume pre-market venue in Korea.

The exchange's mark price fell dramatically from approximately $1,128 to $917 around 23:01 UTC on July 27, following the trade, which independent data sources confirmed was linked to the main Korean pre-market venue. Trade.xyz emphasized that its price oracle functioned correctly, reflecting a legitimate transaction that nonetheless had an outsized impact on the market.

“The oracle system operated as specified,” Trade.xyz stated, asserting that there were no detected malfunctions or manipulations. The company acknowledged that this incident led to the liquidation of various positions due to the significant price shift triggered by the thin trading environment.

In a move to address the situation, Trade.xyz will offer reimbursements to affected traders. However, the firm clarified that this compensation is a discretionary, one-time measure, with specific eligibility criteria to be defined, and payouts expected in the coming days.

Looking ahead, Trade.xyz plans to reassess its reliance on external market venues for price sourcing, opting to place greater emphasis on its own order books. This strategy comes in light of findings indicating that cryptocurrency perpetuals have a greater influence on spot market trends compared to traditional pricing methods.

Notably, this liquidation incident occurred just before a significant downturn in Korean equities, with SK Hynix shares falling about 17% shortly after, despite reporting a 557% increase in quarterly profits that did not meet market expectations.