Lighter responds to a whale's failed long position ARC attack: LLP risk control mechanism is functioning as expected, with a loss limit set at 75,000 USDC
The decentralized derivatives platform Lighter published a response on platform X regarding a whale's failed attempt to attack ARC by going long. The liquidity pool LLP Strategies mechanism underwent its first real-world test in the past few hours, and the results showed that the system operated as expected, protecting LLP holders while safeguarding the interests of traders.
A trader established a significantly large long position on the ARC perpetual contract relative to the market size, with approximately 600 other traders and market makers taking on counterparty positions on the platform. Ultimately, the open interest reached as high as 50 million USDC.
It is reported that LLP Strategies limits downside risk through a "strategy isolation" approach while retaining upside profit potential during price rebounds. As a result, the large long trader incurred a loss of approximately 8.2 million USDC, while LLP's losses were capped at 75,000 USDC. Meanwhile, the short traders who took on the risk realized profits. Lighter stated that this incident validated LLP Strategies' ability to isolate risk and control loss limits under extreme market conditions.
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