On-chain derivatives platform Paradex has refunded approximately $650,000 to around 200 users following a software error during a planned maintenance window that triggered unintended liquidations across multiple markets. The incident occurred on January 19, 2026, during a 30-minute database upgrade intended to support growing demand.
The root cause was identified as a "race condition" during a service restart, which corrupted market data written onchain. This corruption reset funding indices to zero, distorting funding P&L calculations and forcing liquidations of leveraged positions. Paradex emphasized this was an operational failure, not a hack or security breach.
To contain the impact, Paradex took several emergency measures: it temporarily disabled platform access, canceled all open orders (except take-profit and stop-loss orders), and performed a full chain rollback to a snapshot taken prior to the maintenance. The company described this rollback—the first in its history—as "an undesired but necessary action to protect users and restore network integrity."
During a brief post-only trading period following the restart, a few users were impacted by aggressive trades that skewed prices, leading to additional liquidations, mostly in PAXG markets. After auditing all affected accounts, Paradex refunded the $650,000 from its Liquidator Vault to cover improper liquidations and other lingering issues. The platform stated that by Monday, January 26, all remaining data inconsistency concerns on Portfolio and Vault pages should be resolved.
In response to the incident, Paradex has implemented several preventive measures: updated service restart procedures, additional data validation checks, a revised scale-up process for full-downtime maintenance windows, and price-band protections during post-only trading periods. The company stated these changes "strengthen its ability to operate safely as the system scales."
The event highlights how operational and infrastructure failures can disrupt derivatives trading even without external attacks. It follows similar incidents in late 2025, including an eight-hour trading pause on dYdX in October that required $462,000 in compensation, a nearly 10-hour halt at the Chicago Mercantile Exchange in November due to a data center cooling failure, and a Cloudflare service degradation that affected front-end access to major platforms like Coinbase, Blockchain.com, BitMEX, Ledger, and DeFiLlama.
