FTX-linked Paradex rolls back chain after maintenance failure

Paradex, a decentralized perpetual futures exchange built as an appchain on Starknet, has witnessed an outage today due to issues linked to database maintenance, which caused many of its services to become unavailable. 

As of the time of this writing, the exchange’s official status page shows several of its services are still down, including UI, cloud/API, blockchain, bridge, block explorer, and RPC proxy. 

The team ultimately made the decision to revert the chain state to block height 1604710, where it was early morning today, as it was the last known correct state before the database maintenance that caused the issue 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, most open orders are getting cancelled by force, with the exception of TP/SL orders. 

Why did Paradex roll back its network? 

The Paradex rollback was initiated and chosen as the best recourse because it ensures funds and account balances are preserved. However, any trades, liquidations or abnormal funding rates that occurred while the exchange was down will effectively be reversed. 

The incident has triggered unrest among community members who have expressed their frustrations on X. Users on the social media platform have reported missed trading opportunities, concerns over abnormal liquidations during the downtime, and have compared it to recent perp DEX issues.  

While rollbacks like these are rare and often not advised, especially on mature chains, it has been known to happen in newer or high-performance rollups. In some cases, such as what happened with the Flow network, a rollback is resisted, and for good reasons. 

The status page is currently showing updates on the ongoing recovery, and services are scheduled to come back online upon completion of the rollback. 

Paradex team went ahead with rollback despite resistance

The rollback of the chain state saw moderate resistance, but the Paradex team pushed forward with it anyway because they prioritized a fix to restore accounts and positions to pre-maintenance levels. 

In theory, this preserved user funds as there were no permanent losses linked to the bug itself. However, the downsides listed earlier caused grumbling among community members. 

Some even called for refunds or compensation, while others highlighted a breach in trust, claiming smart money would never take a bet on an infrastructure that fails so predictably. However, that was the height of it. 

Unlike what happened with the Flow network, which witnessed a coordinated large-scale resistance from major partners to the suggestion of a rollback, the team was able to forge ahead with the decision despite complaints that a rollback does not automatically solve all the problems caused by the outage for several reasons. 

One was that the source of the problem was maintenance-induced rather than an exploit that immediately cost many users. Another was that the recovery was regarded by the team as necessary to restore normal operation as fast as possible. 

Then there was also the fact that Paradex is a smaller perp DEX; the community and stakeholder pressure was not enough to force a rethink. 

The status page has confirmed the rollback was effected, although services are still in recovery. This contrasts directly with what happened with the Flow network, where immutability ultimately won out. 

Paradex moves on from FTX

Paradex was founded by a team heavily impacted by the FTX collapse, and it is often touted as a project that may offer opportunities (such as airdrops) for FTX creditors to help them manage some of their losses.

Before its collapse, Paradigm and FTX were close strategic partners. In early 2022, Paradigm partnered with FTX to launch “spread trading.” This allowed institutional users to execute complex “cash-and-carry” trades (trading the difference between spot prices and futures) directly on FTX via the Paradigm platform.

An important bit of context is that this Paradigm is an institutional liquidity network founded by Anand Gomes, not the venture capital firm with the same name. FTX’s collapse in November 2022 was a “double whammy” for the Paradigm team, who lost nearly 70% of its clients funds and 60% of its own treasury to the collateral damage from the Silicon Valley Bank crisis and the de-pegging of USDC at the time. Founder Anand Gomes also claimed that the collapse wiped out a huge chunk of his personal wealth.

Don’t just read crypto news. Understand it. Subscribe to our newsletter. It's free.