Paradex: When Glitches Meet Gold, and $650K Later…

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Key Highlights

  • Paradex refunded $650,000 across 200 accounts, mainly tied to PAXG liquidations. (See also: “Oh dear, we accidentally sold your gold for the price of a loaf of bread.”)
  • The incident began with a database migration error that caused invalid pricing and forced liquidations. (Imagine a troll hosting a tea party for your financial data.)
  • The exchange rolled back state, reopened in stages, and says the platform is now running normally. (Aka: “We rewound time, but only for the parts where you lost money.”)

Paradex, a Starknet-based perpetuals exchange, said it refunded $650,000 to about 200 users after a database migration error triggered incorrect liquidations, mainly involving PAXG. 

In an X post on Tuesday, the exchange said funds were distributed after an internal review and confirmed that the platform has returned to normal operations, including deposits and withdrawals. (Aka: “We’ve fixed the problem. Probably. Now, go forth and trade responsibly.”)

Refunds Update

We have completed our review of accounts impacted by yesterday’s incident and have refunded all users who were incorrectly liquidated (primarily related to PAXG). In total, $650k was distributed across 200 accounts. Gigavault deposits and withdrawals have also…

– Paradex (@paradex) January 20, 2026

What happened

The disruption started during scheduled database maintenance, when pricing briefly became invalid on the platform. That bad data flowed into the liquidation engine, and positions were automatically closed at levels traders say never should have existed. (Think of it as a wizard casting a spell with the wrong wand-except the spell is “sell everything at 0.0001% of its value.”)

Paradex later confirmed it would roll back the chain state to the last known correct block, effectively restoring accounts to a pre-maintenance snapshot. Such rollbacks are rare in decentralized systems because it rewinds settled activity. (Like telling a time-traveling historian, “No, today’s history is what we say it is.”)

How it was contained

Rather than flipping the switch back to full trading immediately, the exchange brought the venue online in steps:

  • Cancel-only mode: users could reduce risk and exit, but not place active new trades (Like a restaurant offering free soup but no main courses).
  • Post-only mode: users could place orders without immediate taker execution (A bit like writing love letters that never get delivered).
  • Full trading: reopened once the team said system integrity checks were complete (Translation: “We think it’s safe now. Probably.”)

Voyager, a Starknet block explorer, showed block production continuing normally during the recovery window, signaling the underlying network was stable while Paradex handled its own rollback and restart. (Because nothing says “stability” like a blockchain humming along while a neighboring exchange tries to fix a glitch-induced financial firework show.)

Refunds and changes

In its latest update, Paradex said it completed its review and reimbursed $650,000 across 200 accounts, primarily connected to PAXG liquidations (PAXG is a token backed by gold). (Gold, the one thing in crypto that’s still worth more than a developer’s idea of a “stablecoin.”)

The exchange also said Gigavault deposits and withdrawals are live again (Gigavault is Paradex’s deposit/withdrawal rail). Support tickets tied to these refunds will be closed automatically, with remaining tickets reviewed over the next few days. (Because nothing says “customer service” like automating the very thing you’re apologizing for.)

Trust is earned in the response

Derivatives venues don’t get graded on perfect uptime; they get judged on what happens when something breaks. In this case, the critical pieces were speed and clarity: isolate the damage, restore a clean state, then make impacted users whole with a concrete number and a visible process. As of today, the platform is running normally. (Though “normally” might now include a monthly ritual where engineers offer sacrifices to the database gods.)

Refunds do not erase the incident, but they answer the question traders care about most: when the platform is wrong, does the platform pay. (And if the answer is “yes,” you might still want to check your insurance policy.)

Paradex is built as an appchain on Starknet (an Ethereum Layer 2). That architecture aims to deliver fast, non-custodial perps, but the incident was another reminder that “onchain” doesn’t eliminate operational risk. When core systems like databases, pricing feeds, or liquidation logic misfire, the losses can be immediate, and the response has to be both technical and financial. (In other words: even if you build your castle in the clouds, don’t forget to check the plumbing.)

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2026-01-20 21:30