The dYdX community is reviewing a new proposal to compensate traders who suffered losses during the chain halt on Oct. 10, with payouts totaling $462,097.79.
According to an Oct. 28 post on the dYdX community forum, the exchange’s team identified 27 valid claims after investigating the disruption.
Chain Halt Linked to Rare Technical Edge Case
The dYdX Chain, built on the Cosmos (ATOM), encountered instability during a period of extreme market volatility on Oct. 10 at around 5:35 PM ET. The system experienced a negative balance due to a rare bug in the exchange’s isolated market configuration, which triggered an automatic halt designed to maintain the network’s state.
Validators took several hours to restart oracle services, and stale price feeds briefly persisted once the network resumed. Although no funds were directly lost on-chain, some users experienced liquidations and incorrect trade executions during the halt, resulting in financial losses.
According to dYdX Labs’ Oct. 27 post-mortem, the issue was caused by a recent code update that was not properly organized. It also discovered issues with validator coordination, which are common in proof-of-stake systems and can result in oracle desynchronisation during high-stress events, delaying recovery.
DeFi Governance in Action
The proposed payout aims to increase confidence in the decentralised governance structure of dYdX. If authorized, the impacted wallets will receive a proportionate distribution of $462,097.79 in USD Coin (USDC). The action has been compared to Binance’s $400 million user support program after its own system disruptions earlier this month.
Analysts say such incidents highlight both the transparency and risks of decentralized systems. While central exchanges can absorb losses internally, DeFi protocols rely on governance and insurance mechanisms to maintain user confidence. Community sentiment on the forum has been largely positive, with most users supporting swift approval to close the matter before the end of October.