On January 19, Paradex’s perps decentralized exchange experienced a database migration issue that caused Bitcoin to display a $0 price, triggering a cascade of liquidations. The anomaly affected the Paradex blockchain, block explorer, bridge, and API, leading the exchange to force-cancel all open orders.
Paradex initiated a rollback to block 1,604,710, the last known correct state before the maintenance issue. According to the exchange, all accounts were restored to their pre-maintenance balances, and user funds were confirmed safe as recovery efforts continued. The exchange posted frequent updates on its status page throughout the process to reassure users.
Liquidations and Market Impact
The price glitch coincided with a period of heightened market volatility. Bitcoin had already dropped from over $95,000 to $92,284 in the 24 hours preceding the incident, reflecting broader market pressures.
The glitch amplified liquidations, with over $875 million in positions closed across Paradex, including $234 million in Bitcoin alone, according to CoinGlass data. Paradex’s perps protocol held approximately $641 million in open interest and recorded roughly $37 billion in trading volume over the previous 30 days, highlighting the scale of exposure to technical failures.
Analysts noted that thin liquidity during the Martin Luther King Jr. holiday and early trading in Asian markets likely exacerbated the impact of the glitch on leveraged positions.
Recovery and Institutional Context
By 5:00 a.m. ET, Paradex confirmed all services were operational. The episode underscores the operational risks inherent in decentralized perps exchanges, particularly those built on layer-2 networks like Starknet, where database integrity directly affects market stability.
Beyond immediate technical implications, the incident highlights how infrastructure issues can amplify price movements, creating liquidity stress across digital asset markets.
Crypto markets were also reacting to renewed US-EU trade tensions and a quieter global market environment due to holiday-thinned participation. Industry observers noted that while the exchange successfully contained losses, the event serves as a cautionary tale for risk management, stress testing, and monitoring protocols within high-leverage crypto trading ecosystems.