Bitcoin has gone to zero! The decentralized exchange Paradex made a huge mistake, and users suffered massive liquidations.

Decentralized exchange Paradex experienced a database migration error that caused Bitcoin prices to drop to zero, triggering a large-scale liquidation. The team urgently traced back the blockchain state to repair the data, which also sparked controversy over decentralization and control.

Paradex Database Migration Error Causes Bitcoin to Drop to Zero

Developed on Ethereum Layer-2 network Starknet, the decentralized perpetual contract exchange Paradex suffered a serious technical failure yesterday (1/19). Due to an error during database migration, the Bitcoin price within the exchange instantly dropped to zero.

The abnormal Bitcoin price immediately triggered a massive chain reaction of liquidations, with many Paradex users’ positions forcibly closed.

Subsequently, Paradex decided to rollback the state of the Paradex chain to block height 1,604,710— the last normal state before the database maintenance—to fix the data error.

Image source: XSolanaFloor shared Paradex official Discord announcement, after Bitcoin instantly dropped to zero, the team decided to rollback the transaction

A rollback refers to resetting a blockchain application’s state to a previous point in time to undo erroneous data or transactions, which is usually an emergency fix to restore normal operation and protect user funds.

Paradex emphasized that all accounts will be restored to their pre-maintenance state, and user funds are currently safe. Besides take-profit and stop-loss (TPSL) orders, all open orders have been forcibly canceled.

Paradex Rollback Decision Sparks Centralization Debate

However, Paradex’s approach has reignited fierce debate over “blockchain rollback.” Such operations are extremely rare and controversial in the industry because they violate the core principle that blockchain transactions, once confirmed, are immutable.

Most blockchain networks, when facing failures, typically choose to pause network activity or deploy targeted fixes to prevent further damage, rather than directly reversing completed transactions.

If a blockchain chooses to rollback, it usually indicates that normal security measures have failed, which inevitably raises questions about who truly controls the project’s technology.

Another DeFi project team was shocked— the idea of a decentralized exchange (DEX) and rollback appearing in the same sentence is surprising.

Image source: X Industry shock— the terms “decentralized exchange (DEX)” and “rollback” appearing in the same sentence

Similar controversies related to rollback have occurred frequently in recent months.

For example, last year, after the Balancer hack, Berachain chose to temporarily halt the network and perform an emergency hard fork, preventing further losses without reversing transactions; by contrast, public chain Flow was widely criticized for proposing a rollback to undo a $3.9 million vulnerability loss, later adopting an isolated recovery plan that did not involve reversing transactions.

Flow Incident Review:
FLOW Token Plummets Over 40%! How a security incident on the Flow blockchain triggered chaos?

Paradex Incidents Continue, System Stability Under Test

Paradex, the decentralized exchange, has experienced multiple turbulence episodes recently. As early as September 2025, the platform suffered a severe service outage caused by a bot attack that overloaded its legacy account creation system.

This attack caused network delays for Paradex and forced the system to cancel numerous orders, severely impacting user trading experience.

Paradex was incubated by liquidity network Paradigm (not the same-named venture capital firm). Although the platform facilitated approximately $37 billion in trading volume over the past 30 days, frequent technical failures and rollback decisions that break the immutability of blockchain could continue to undermine user trust.

Further reading:
Break the filter! Bybit: 16 chains can freeze user funds— is blockchain truly decentralized?