Lighter Exchange Announces 250,000 Points Compensation to Traders Impacted by System and Market Instabilities

Decentralized exchange Lighter has taken proactive measures to compensate traders affected by the recent system performance issues and market instability. On October 15 (local time), the platform revealed plans to distribute a total of 250,000 points as special compensation to users who incurred losses during the challenges on October 10. This initiative highlights Lighter’s commitment to restoring trust and mitigating damages caused by the disruption.

Compensation will be distributed across three well-defined categories, tailored to address specific losses and their underlying causes.

Categories of Compensation: Addressing Key User Losses

1. Losses Linked to System Performance Degradation Pre-Market Crash

The first compensation category pertains to losses suffered due to system performance issues leading up to the market plunge. According to Lighter, the degradation in system functionality caused traders to incur losses estimated at $25 million during this critical period. To compensate, Lighter will allocate 150,000 points to affected users, providing substantial financial redress. Additionally, liquidation fees incurred during this time will be refunded in the stablecoin USDC, further easing the financial strain on traders.

2. Liquidity Pool (LLP) Holders' 5% Market Losses

Liquidity Pool (LLP) holders experienced a 5% decrease in their portfolio values during the market turbulence, despite Lighter’s system operating as intended. Lighter acknowledged that some users misunderstood the LLP’s role as the “ultimate liquidity provider,” which contributed to misaligned risk expectations. Recognizing this gap in user understanding, Lighter will award LLP holders 25,000 points as partial compensation for their losses.

3. Sequencer Database Outage Costs Post-Market Turmoil

The third tranche of compensation focuses on the impact of a sequencer database malfunction that caused a 4.5-hour service outage approximately five hours after the initial market crash. This incident resulted in trader losses totaling $7 million due to delayed system access during a volatile trading window. To mitigate these losses, Lighter is allocating 75,000 points to compensate affected users. Additionally, liquidation fees incurred during the outage will also be fully refunded in USDC, ensuring that the financial ramifications of service downtime are effectively addressed.

Season 2 Points Distribution to Resume on October 17

Alongside its special compensation measures, Lighter has confirmed the resumption of its regular Season 2 point distribution. Starting Friday, October 17, the platform will distribute 600,000 points on a weekly basis. This figure includes points accrued over the previous 2.5 weeks, reflecting Lighter’s dedication to maintaining transparency and consistent rewards for its users.

Strengthening User Trust Through Transparent Action

By announcing a detailed framework to address the losses stemming from the October 10 incidents, Lighter is reinforcing its commitment to user trust and service integrity. These compensation efforts showcase the exchange's determination to support its trading community, ensuring that it can recover from the financial and operational disruptions caused by market volatility and system outages.