Key Takeaways
- The community is reviewing a new proposal to compensate traders who suffered losses
- The vote will determine whether reimbursements should be made using funds from the insurance reserve.
Leading decentralized derivatives exchange dYdX announced on Monday that its governance community will vote on whether to compensate affected traders up to $462,000 from the protocol’s insurance fund. As per reports, the community is reviewing a new proposal to compensate traders who suffered losses during the October 10 outage.
The exchange confirmed that no user funds were lost on-chain, but several traders suffered liquidation-related losses during the chain halt. The vote will determine whether reimbursements should be made using funds from the insurance reserve.
A recent post on the dYdX community forum, notes that the defi platform’s team identified 27 valid claims after probing the halt. The dYdX had attributed the eight-hour outage on October 10 as a “misordered code process” during a deployment. According to the platform’s post-mortem report, the incident caused the dYdX Chain to halt operations for roughly eight hours. The delay was extended as validators took longer to restart their oracle sidecar services, resulting in stale price data once the network resumed.
Although the outage did not result in the loss of on-chain funds, dYdX said its matching engine executed trades and liquidations at incorrect prices once operations restarted, leaving some traders with unexpected losses. The exchange stated that it intends to support affected users and proposed that the community decide whether to draw from its insurance fund for compensation.
The outage coincided with what analysts described as the largest liquidation event in crypto history, with an estimated $19 billion in leveraged positions wiped out across exchanges. The timing of the network disruption exacerbated losses for traders relying on dYdX’s derivatives platform.
“The dYdX Chain experienced a halt due to a misordered code process. Once validators restarted, outdated oracle data caused the matching engine to process trades at incorrect prices,” the exchange explained in its incident report.
dYdX emphasized that the final decision on compensation will rest with the community through a governance vote. The proposal, if approved, would reimburse affected users with up to $462,000 from the protocol’s insurance fund to cover liquidation-related damages.
