Whale Loses $8.2M in ARC Liquidation on Lighter as Protocol Contain Losses
A trader lost $8.2M on Lighter due to a failed leveraged bet on ARC, triggering auto-deleveraging and limiting losses to liquidity providers.Summary
A large crypto trader experienced $8.2 million in losses after a leveraged long position on the ARC perpetuals market on Lighter unraveled. The trader had built a substantial position, reaching $50 million in open interest, against approximately 600 opposing traders. When ARC’s price declined, $2 million was liquidated on the order book, and the remaining position was moved to Lighter’s liquidity provider pool (LLP). Auto-deleveraging was activated, partially closing profitable short positions to manage the risk. While the LLP briefly absorbed $14.7 million worth of ARC, losses to liquidity providers were capped at $75,000 due to risk isolation. Lighter has since implemented new safeguards, including a $40 million open interest cap on ARC and a capped liquidity strategy, to prevent similar incidents and address broader concerns about price manipulation on decentralized platforms.
(Source：Cointelegraph)