Company behind AI trade that caused $60 million crypto liquidations to cover all losses
Trade.xyz has committed to covering $60 million in losses following a crypto liquidation event caused by an automated trade triggered by an oracle system. The company is now re-evaluating its reliance on external data sources for price formation in its perpetual futures contracts.
Why it matters
It highlights the risks associated with automated trading systems and oracle dependencies in the volatile cryptocurrency market.
The mark price, the reference figure used to calculate profits, losses and liquidations, fell from about $1,128 to $917 at 23:01 UTC on July 27, according to the company. The print came from an executed trade relayed by multiple independent data providers, and the data point feeding the contract was tracking what Trade.xyz called the primary Korean pre-market venue.
“The oracle system worked as intended according to its specification,” the company said. Nothing malfunctioned and nobody manipulated anything, on the evidence so far
The oracle, a tool that fetchs data from outside points to within a blockchain-based system, faithfully reported a real trade on a market thin enough that one order moved the price nearly a fifth, and the contract liquidated positions accordingly.
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