Company TradeXYZ announced that it will compensate traders for losses incurred while trading shares of the semiconductor company SK Hynix (SKHX). A decentralized market triggered liquidations after an automatic drop in SK Hynix stock during pre-market trading.
The South Korean semiconductor company SK Hynix (Nasdaq:SKHY) is among the most actively traded perpetual contracts on TradeXYZ. Currently, the main KOSPI index is unavailable, but traders on the blockchain quickly reacted to the potential for trend-driven movements in SK Hynix. The stock also reflects the overall sentiment towards the semiconductor company market.
As the South Korean market entered another correction, HIP-3 is one of the platforms where traders can bet on a decline and immediately open a short position on SK Hynix stock.
To date, the cumulative trading volume for SKHX on TradeXYZ has exceeded $20.9 billion. This caused a disproportionate impact as sharp index fluctuations led to long position liquidations.
On the HIP-3 exchange as of July 29, SKHX was the second most active perpetual contract. Open interest for the contract reached $493 million, and trading volume over the last 24 hours was $589 million. The past day was one of the most active for SKHX trading in July.
On the Lighter perpetual futures exchange, an anomalously low price was also observed, dropping to $839, but then the candle wick disappeared, and the market displays a "delisted" status.
Why Did a Wave of Liquidations Occur on TradeXYZ?
TradeXYZ explained that SK Hynix stock fell from $1,127.9 to $917.25 during Asian trading hours. TradeXYZ uses oracles to access external prices, and in this case, the oracle was operational. According to the developer, the oracle system functioned correctly, and the liquidations were not caused by any other errors on the exchange's part.
The exchange promised to cover losses related to the price anomaly and will disclose criteria for receiving compensation in the coming days.
On the South Korean NXT exchange, SKHX price showed an anomaly at 29% below the previous day's closing price. The price was indeed distorted but was accepted by TradeXYZ's oracles. The price of perpetual futures on HIP-3 fell by 17.9% in a matter of minutes, leading to the liquidation of long positions worth approximately $57 million for 960 trading accounts.
The price anomaly arose from a single order executed at 8:00 AM local South Korean time when one share was sold at the daily lower limit. At market open, a small number of buy orders meant this single share sale determined the first reference price, which was then distributed to oracles for decentralized trading.
During the price fluctuations, TradeXYZ's liquidity absorbed about 11 percentage points, but this could not save all leveraged long positions.
Major Investors Have Started Shorting SKHX Again
The main appeal of SKHX lies in the potential for trend-driven movements and the ability to open short positions as growth in the semiconductor sector slows.
The SKHX perpetual contract lists 108 large positions, making it one of the top choices on the HIP-3 platform. Of these, 48 positions are long positions in SKHX. The largest position is valued at $47.35 million, with unrealized profit exceeding $10 million.
This same major player is also opening short positions on Nvidia stock (Nasdaq:NVDA), reflecting a general attitude towards trading semiconductors.
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