Lighter Strategic LLP First Real-World Test: Limiting Losses and Protecting Liquidity Providers

PANews reported on February 26th that Lighter announced the successful completion of the first live test of its LLP Strategies in a recent large-scale long liquidation of ARC perpetual contracts. A trader established a massive long position in ARC, with total open interest reaching 50 million USDC, and approximately 600 traders and market makers on the other end. The ARC contract belonged to Strategy 7, corresponding to an LLP risk that could only be mitigated by 75,000 USDC. As the ARC price fell, the massive long position was first liquidated in the order book for approximately 2 million USDC, and then further liquidated into LLP, which was then taken over by healthy short positions. Ultimately, the large trader lost approximately 8.2 million USDC, while the LLP loss was limited to 75,000 USDC, and the short sellers profited.