Decentralized perpetual trading platform edgeX said it will refund losses on its platform from the EDGE token attack on Tuesday, according to an X post on Wednesday.
In particular, "goodwill care payments" are being offered to affected users who realized losses from EDGE long liquidations or stop-loss triggers on edgeX Perp V1 and V2 between 04:50 and 06:00 (UTC+8) on June 2.
Eligible users will receive compensation for "actual losses," though not for "trading fees, funding fees, or unrealized profits." These payments will be capped at 100,000 USDC per user, paid 50% in USDC within seven days and the remainder in EDGE tokens calculated based on the seven-day time-weighted average price of the token, according to the post.
"If you had EDGE long positions liquidated or stop-loss orders executed during the specified timeframe, please open a ticket in Discord and submit your UID. The supporting team will verify your eligibility and cross-reference the corresponding realized order losses," the team wrote.
EdgeX is one of the larger onchain perps venues, in a league with platforms like Lighter, ApeX and Aster.
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According to an overview provided by edgeX, some 174 addresses flooded a PancakeSwap pool with EDGE token sell orders within a minute during a period of thin liquidity and low trading activity. This immediately caused a 23% price drop that then spread to perp markets on edgeX and centralized exchanges.
"As a result of the contagion, within just one hour between 5:00 and 6:00 am, the combined sell volume across Binance, OKX, Bybit, and edgeX perps reached $140.66 million," edgeX wrote. Things were made worse given the heavy crowding of long positions, with the long/short ratio standing 68.2%, which triggered a wave of long liquidations and another round of spot sales.
"Once panic set in, spot trading across CEXs and the edgeX platform became highly active, with large holders beginning to sell," edgeX wrote, noting trading volume reached $70 million, or up to 10x the normal volume.
The EDGE token dropped 71% to as low as $0.40 from above $1.40 before the attack. It is trading around $0.63 on Wednesday.
The edgeX team stated multiple times that they did not sell their allocations and had no involvement in the attack. They further state that the edgeX protocol continued operating normally, with no risk to user funds.
As part of the investigation, edgeX requested information from CEXs and two institutional liquidity providers, and reported receiving preliminary analyses from OKX, Bybit, Bitget, and Bithumb that confirmed the "incident was driven by thin liquidity conditions, not by large-scale EDGE selling from the team."
ZachXBT's concerns
Crypto sleuth ZachXBT thinks the liquidation event was caused by edgeX insiders. In a response on X, ZachXBT claimed that "we all know edgeX supply was being controlled by a few insiders with a low float."
"If you care about transparency at all, you will name the counterparties / MM agreements which lead to these events," ZachXBT said, questioning elsewhere the legitimacy of edgeX's initial internal investigation.
Prior to Wednesday’s initial analysis, edgeX posted at least twice about the "sudden and irregular price movement," noting that early signs suggested "deliberate attempts by a certain external party to manipulate the market price of EDGE."
EdgeX is offering a 200,000 USDC bounty for information identifying the attackers or "material information that leads to their identification."
"This incident exposed the risks that come with thin market liquidity," edgeX wrote. "In response, we have already onboarded additional market makers and liquidity providers to deepen EDGE liquidity across both on-chain and off-chain venues, with the goal of making this type of exploit structurally more difficult to execute in the future."