Trade.xyz will reimburse every trader liquidated when its SK Hynix perpetual futures contract dropped 19% on Monday, a move the exchange traces to one executed trade on a thin Korean pre-market venue. The company says its price oracle functioned as designed, and calls the payout a one-time discretionary decision. It now plans to give its own orderbooks more weight when it sources prices.
Decentralized perpetuals exchange Trade.xyz said it will cover the losses of traders liquidated when its SK Hynix perpetual futures contract crashed 19% late on Monday. The exchange attributes the drop — the trade that caused $60 million in crypto liquidations — to a single executed trade on a thin Korean pre-market venue rather than to any failure in its systems.
The mark price — the reference figure used to calculate profits, losses and liquidations — fell from about $1,128 to $917 at 23:01 UTC on July 27, according to the company. That print came from an executed trade relayed by multiple independent data providers, and the data point feeding the contract tracked what Trade.xyz called the primary Korean pre-market venue.
Trade.xyz says the oracle did its job
Trade.xyz said its price oracle functioned as designed: "The oracle system worked as intended according to its specification." Nothing malfunctioned and nobody manipulated anything, on the evidence so far.
That oracle — a tool that fetches data from outside points into a blockchain-based system — faithfully reported a real trade on a market thin enough that one order moved the price nearly a fifth, and the contract liquidated positions accordingly.
Covering those losses is a one-time discretionary decision rather than a commitment to do it again, the company said, with eligibility rules to follow and payouts expected within days.
The exchange leans toward its own orderbooks
The remedy it outlined is the more consequential part. Trade.xyz said it is revisiting its assumptions about external venues and will weigh price formation on its own orderbooks, which it described as carrying 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 also 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, and SK Hynix shares fell about 17% on Wednesday after quarterly profit rose 557% and still missed estimates.
Source: CoinDesk
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