The overnight LP drawdown was caused by an internal risk configuration error. When we list new markets, we manually add certain risk params. For one of the markets ($LYFT), the risk params were mistakenly set far higher than intended. As a result, the risk engine overreacted and applied extreme slippage and funding, which drove abnormal price movements and allowed two traders to profit irregularly.
All parties, including LPs, have been fully made whole. Moving forward, we’re standardizing and automating param checks, and enforcing risk caps that limit how much any single market can move LP pnl before auto-circuit breaking.
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