Paradex, a decentralized crypto exchange built as an appchain on the Ethereum layer-two network Starknet, will use a centralized rollback to reverse unwarranted liquidations that occurred after a software bug priced Bitcoin at $0.
What Happened: Database Bug Triggers Mass Liquidations
The glitch was introduced during routine database maintenance. It caused Bitcoin to display a zero-dollar price on the perpetuals exchange, triggering a wave of liquidations across user positions.
Paradex operates as a perpetuals platform, where traders hold leveraged positions in futures contracts rather than actual assets.
The exchange confirmed all user funds remain safe.
Trading has been suspended while the team works to restore the platform to its pre-maintenance state.
The platform has averaged more than $1 billion in daily trading volume over the past month. No timeline has been provided for when trading will resume.
Why It Matters: Decentralization Claims Under Scrutiny
The decision to implement a rollback exposes a tension at the heart of decentralized finance.
Critics have long argued that many platforms marketing themselves as decentralized retain centralized control mechanisms. The ability to reverse transactions and restore previous states requires administrative authority that contradicts the trustless principles DeFi claims to uphold.
Similar interventions have occurred elsewhere in crypto.
Multiple blockchains either rolled back transactions or froze funds following a $120 million hack last year.
Even Ethereum and Bitcoin have faced such moments.
Ethereum hard-forked to address the DAO exploit in its early years, while Bitcoin nodes rejected transactions from a 2010 value overflow incident that created coins from nothing.