Following our post-mortem on the dYdX Chain outage, we want to provide clarity on how affected users may be compensated and outline how we believe reimbursements could be fairly considered by the dYdX governance community.‍

Overview‍

The outage was caused by a misordered process in collateral pool transfers during liquidations in isolated markets. While the insurance fund had sufficient capital to cover losses, this error triggered a protocol-level failsafe, temporarily halting the chain to maintain system integrity. Read the full details here.

Improvement Updates‍

The root cause of the outage has already been addressed. The liquidation and collateral-transfer sequence has been corrected, with additional order-of-operations checks and automated tests added to prevent a recurrence. 

We are actively working with the Operations subDAO, the Foundation, and validators to streamline incident response and shorten coordination timelines, ensuring faster and more reliable recovery in any future events.

Compensation Methodology‍

The community User Support team has been in direct contact with impacted traders across X, Discord, and the dydx.trade Intercom support platform. 

The User Support team conducted a thorough review of all trades affected during the outage window. Compensation period: From Oct 10, 2025, 21:52:22 UTC (when chain first resumed with oracle price inconsistencies) to Oct 11, 2025, 05:35:00 UTC (when oracles were fixed). The methodology included:

• Identifying losses caused by outage:
  
  • Examined all liquidations and deleveragings that occurred while the chain was halted 
  • Identified trades (during the outage window) where execution prices were incorrect due to temporary stale oracle price data
  • Calculated what the results would have been if executed at the accurate market prices reflected by other exchanges at that time

Click here to view the table in sheets

Next Steps and Potential Compensation for Affected Users‍

The outage arose from a misordered code process, and its duration was exacerbated by delays in validators restarting their oracle sidecar services. When the chain resumed, the matching engine processed trades/liquidations at incorrect prices due to stale oracle data, which classifies these losses as protocol-level execution errors. Given these circumstances the The dYdX governance community could decide to compensate affected users from the protocol insurance fund. 

If approved by governance, only a small portion (2.85% of the insurance fund, or roughly $462,000 of the $16 million total) would be used to provide compensation. This approach aligns with the fund’s intended purpose while preserving overall protocol security.‍

Why This Matters‍

Over the past eight years, dYdX has built a reputation as a trusted and resilient DeFi platform, recently surpassing $1.5 trillion in total trading volume. Incidents like this reinforce the importance of transparency, trust, and proactive communication - values we continue to uphold.

We sincerely thank everyone for their support and remain dedicated to ensuring the dYdX Chain remains a reliable, resilient platform for everyone.

Disclaimer

© 2025 dYdX International Ltd. All rights reserved.

‍dYdX is a decentralised, disintermediated and permissionless protocol, and is not available in the U.S. or to other Restricted Persons. All use of dYdX software is subject to the dYdX Software Terms of Use. 

dYdX International Ltd ("DI"), dYdX Trading Inc. dba dYdX Labs (“dYdX Labs”) and their affiliates do not develop, control or participate in the operation of any component of the dYdX protocol for public use.

To the extent this content describes anticipated features in the open source dYdX software, the implementation of these features in any live deployment of dYdX software will be decided by the relevant deployer community. 

The information provided herein is for general informational purposes only, and DI reserves the right to update, modify, or amend any contents herein, at its sole discretion and without prior notice. Nothing herein should be used or considered as legal, financial, tax, or any other advice, nor as an instruction or invitation to act in any way by anyone.

Engaging in any activity involving crypto-assets (including staking, trading crypto assets and depositing into the MegaVault) is risky due to high volatility. Returns are not guaranteed and may fluctuate over time depending on multiple factors, and you may lose your entire investment, particularly when using leverage. The inclusion of any launchable market on dYdX does not represent endorsement of the projects and all listings are community-driven. You should perform your own research and due diligence before engaging in any activity involving crypto-assets. 

In no event will DI, dYdX Labs or their affiliates be liable for any loss or damage, including without limitation, indirect or consequential loss or damage, arising from or in connection with the use of this content. By continuing to access this content, you agree to the above and accept the possibility of changes in the information provided.

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