dYdX proposes $462K compensation after an 8-hour chain halt

Decentralized derivatives exchange dYdX announced on Monday, October 27, that its governance community will vote on whether to compensate affected traders up to $462,000 from the protocol’s insurance fund.

This announcement came after dYdX encountered an outage on October 10 caused by a misordered code process. According to dYdX’s post-mortem report, the outage was triggered by a “misordered code process” during a deployment, which halted the dYdX Chain for roughly eight hours. The downtime was prolonged by delays among validators restarting their oracle sidecar services, leading to stale price data once the network came back online.

DYdX encounters a chain halt, interfering with its operation 

Decentralized exchange dYdX shared a report and an update with the community, outlining their intention to support traders who were victims of a chain halt that paused operations for several hours during the market crash last month. Although no on-chain funds were lost, the glitch caused dYdX’s matching engine to execute trades and liquidations at incorrect prices, leaving several traders with unexpected losses.

Notably, the eight-hour outage occurred during the biggest liquidation event in crypto history. Consequently, the interruption led dYdX to suggest that the community handle reimbursements from its insurance fund.

The decentralized exchange explained that when the chain started again, the matching engine handled trades and liquidations at incorrect prices due to outdated oracle data.

Meanwhile, despite dYdX confirming that no user funds were lost on-chain, some traders encountered significant losses related to liquidations while the system was down.

Regarding the situation, the dYdX governance community is set to vote on whether impacted traders should be compensated from the protocol’s insurance fund. This occurred after the crypto market experienced a crash that wiped out approximately $19 billion in positions, marking the largest liquidation event in crypto history.

Apart from dYdX, this incident also challenged Binance’s trading services as the exchange experienced substantial price swings, user concerns, and regulatory scrutiny. Traders expressed dissatisfaction with Binance due to technical issues that prevented them from closing their positions. This involved issues with the interface that displayed multiple tokens with prices below zero and the depeg of Ethena’s USDe synthetic stablecoin. 

Binance commits $728 million to support investors affected by an outage 

Following the outage, sources noted that Binance did not accept responsibility for the losses incurred by traders. However, the cryptocurrency exchange developed a support initiative worth $400 million for those affected.

This initiative comprises $300 million in token vouchers and $100 million for impacted participants in the sector.

Regarding the token vouchers, eligible users were set to receive token vouchers valued between $4 and $6,000. To qualify, Binance set conditions for traders to have experienced forced liquidations on their futures or margin positions from Friday 00:00 UTC and Saturday 23:59 UTC.

Moreover, users needed to have encountered a loss of at least $50 in crypto, and those losses should account for at least 30% of their total net worth. 

On the other hand, to support memecoin traders who suffered losses due to the crash, Binance also introduced a $45 million BNB token airdrop to boost market confidence.

Overall, the exchange pledged $728 million to aid traders affected by the sell-off. Still, Binance claimed that it is not responsible for users’ losses.

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