Paradex Error Triggers Bitcoin $0 Pricing and Blockchain Rollback

Paradex, a decentralized exchange on Starknet, experienced a significant issue when Bitcoin BTC was mistakenly priced at $0 on January 19. This error led to widespread liquidations and necessitated a blockchain rollback to block 1,604,710.

The error originated from a faulty database migration, revealing vulnerabilities in Paradex's infrastructure.
A rollback was conducted to restore user accounts and positions to their state before the maintenance.
All open orders were canceled, except TPSL orders.

Incident Screenshot

Operations ceased for about eight hours, resuming at 12:10 UTC. Paradex assured users that funds are secure. The incident caused Starknet's native token STRK to drop 3.6%, trading at $0.081. Bitcoin trades at $92,958.36, down 2.17% over 24 hours.

Implications of the Rollback

A blockchain rollback challenges the principle of immutability, crucial for decentralized platforms.
This incident raises concerns regarding DeFi derivatives, as it introduces counterparty risk similar to traditional finance.
Future scrutiny on appchain governance and protocols is expected, questioning the true decentralization of such platforms.

Meanwhile, risk concentration is shifting towards Hyperliquid HYPE, dominating the perp DEX market with high volume and open interest, reflecting a preference for perceived robust platforms amid market volatility.