Trade.xyz, which runs on-chain perpetual markets on the Hyperliquid platform, has announced it will cover eligible losses from liquidations stemming from a price anomaly that affected its contract tracking SK Hynix. The South Korean company is a prominent chipmaker and a key producer of high-bandwidth memory for the artificial intelligence industry.

The company confirmed that a sharp price movement occurred on Monday at 23:01 UTC, causing the mark price of its SKHYNIX contract to plummet from $1,127.90 to $917.25. This nearly 19% drop was triggered by an executed trade on an external market that was then relayed to the platform by numerous independent data providers.

Response and Reimbursement

In response to the incident, Trade.xyz has committed to reimbursing affected traders. The company plans to announce eligibility criteria soon, with the distributions expected to be completed in the coming days. The platform did not specify the total amount it intends to distribute or the number of traders who will be eligible for compensation.

While acknowledging the frustration among traders, Trade.xyz emphasized that its oracle system had "worked as intended according to its specification" because it was correctly tracking the external venue used for the primary South Korean pre-market. The company characterized the reimbursement as a "one-time discretionary decision" and stated it will conduct a review of how prices are formed during periods of extreme market volatility.

Technical Cause and Market Impact

According to platform documentation, the sharp price move originated from a transaction executed on an external market, not from its own order book. The SK Hynix oracle on Trade.xyz functions by tracking the common share price (SKHX) in Korean won and converting it to a US dollar value using the current exchange rate.

This external price print was fed into the oracle, which in turn caused the sharp move in the contract's mark price. On Hyperliquid, the mark price is the critical metric used to value positions for margin calculations and to trigger liquidations for leveraged trades.

The SK Hynix contract is one of the most popular markets on the Hyperliquid platform. Data from Hyperliquid on Wednesday showed that the contract had attracted over $1.5 billion in trading volume over a 24-hour period and held open interest of nearly $600 million at the time of writing.

Future Adjustments and Platform Context

Looking ahead, Trade.xyz is evaluating potential changes to its system. The platform is considering assigning greater weight to prices formed on its own order books, which it now believes provide "meaningful liquidity and market signals."

Trade.xyz operates within Hyperliquid’s HIP-3 framework, a system that enables builders to introduce perpetual contracts linked to assets with external price feeds. The platform has been a significant contributor to this ecosystem, accounting for over $22 billion of the initial $25 billion in cumulative volume generated through HIP-3. More recently, Trade.xyz also launched an officially licensed perpetual contract for the S&P 500, utilizing data from S&P Dow Jones Indices.