Service Disruption and Rollback
Paradex, a decentralized perpetual futures exchange operating as an appchain on Starknet, experienced an outage today. The disruption was attributed to issues arising from database maintenance, leading to the unavailability of many of its services.
As of the time of this report, the exchange's official status page indicated that several services remained down, including the user interface (UI), cloud/API, blockchain, bridge, block explorer, and RPC proxy.
The Paradex team ultimately decided to revert the chain state to block height 1604710, which was the last known correct state from early this morning before the problematic database maintenance began.
All user accounts and positions on the exchange are expected to be restored to their pre-maintenance state. However, as part of the recovery process, most open orders have been canceled by force, with the exception of take-profit (TP) and stop-loss (SL) orders.
Reasons for the Network Rollback
The rollback of the Paradex network was initiated as the chosen course of action to ensure the preservation of funds and account balances. However, any trades, liquidations, or abnormal funding rates that occurred while the exchange was offline will be effectively reversed.
This incident has caused dissatisfaction among community members, who have voiced their frustrations on social media. Users have reported missed trading opportunities and expressed concerns over abnormal liquidations during the downtime, drawing comparisons to recent issues faced by other perpetual decentralized exchanges (DEXs).
While such rollbacks are uncommon and generally not advised, particularly on established blockchain networks, they have occurred on newer or high-performance rollups. In some instances, like the Flow network, rollbacks have been resisted for valid reasons.
The status page is currently providing updates on the ongoing recovery efforts, with services scheduled to resume operation upon the completion of the rollback process.
Paradex Team's Decision to Proceed with Rollback
Despite encountering moderate resistance, the Paradex team proceeded with the chain state rollback. Their primary objective was to restore accounts and positions to their pre-maintenance levels.
In theory, this approach preserved user funds by preventing permanent losses directly linked to the bug. Nevertheless, the aforementioned downsides led to discontent within the community.
Some users called for refunds or compensation, while others questioned the platform's reliability, suggesting that sophisticated investors would not trust infrastructure that exhibits such predictable failures.
Unlike the situation with the Flow network, which saw coordinated resistance from major partners to a proposed rollback, the Paradex team was able to move forward with their decision despite complaints. These complaints highlighted that a rollback does not automatically resolve all problems caused by an outage for several reasons.
One reason was that the issue stemmed from maintenance-induced problems rather than an exploit that directly caused user losses. Another factor was the team's assessment that the recovery was necessary to reinstate normal operations as swiftly as possible.
Furthermore, Paradex is a smaller perpetual DEX, and the community and stakeholder pressure was insufficient to compel a reconsideration of the rollback decision.
The status page has confirmed the execution of the rollback, although services are still in the recovery phase. This contrasts with the Flow network's situation, where immutability ultimately prevailed.
Paradex's Origins and Connection to FTX
Paradex was established by a team significantly affected by the collapse of FTX. The project is often presented as a potential avenue for FTX creditors to recoup some of their losses, possibly through opportunities like airdrops.
Prior to its downfall, Paradigm and FTX were close strategic partners. In early 2022, Paradigm collaborated with FTX to introduce "spread trading," enabling institutional clients to execute complex "cash-and-carry" trades—trading the difference between spot and futures prices—directly on FTX through the Paradigm platform.
It is important to note that this Paradigm refers to an institutional liquidity network founded by Anand Gomes, distinct from the venture capital firm of the same name. The collapse of FTX in November 2022 had a severe impact on the Paradigm team, resulting in the loss of nearly 70% of client funds and 60% of their own treasury. This was compounded by the collateral damage from the Silicon Valley Bank crisis and the de-pegging of USDC at the time. Founder Anand Gomes also stated that the collapse led to a significant depletion of his personal wealth.