Inside Lighter’s New Strategy System First Major Test: Handling $50M in ARC Perpetual Volume

On February 26, Lighter, a decentralized crypto exchange, announced that its upgraded liquidity pool system successfully resisted a $50 million ARC perpetual long squeeze attempt.

This occurred after approximately 600 traders reversed a whale’s position, resulting in an $8.2 million loss, and the episode tested Lighter’s newly launched LLP Strategies, capping the downside risk for liquidity providers at just $75,000.

LLP Strategies Face First Stress Event

In a February 17 post on X, Lighter announced changes to its LLP infrastructure, splitting liquidity into separate strategies for different market types, including RWAs. Risk, liquidations, and auto-deleveraging are now handled at the strategy level rather than across the entire pool.

That structure faced what the platform called its “first battle test” on February 26. According to Lighter, a trader had built a large long position in ARC perpetuals over several days, with around 600 other traders and market makers taking the short side and pushing total open interest to $50 million.

ARC perp trading was assigned to Strategy #7, a high-risk strategy with about $75,000 in allocated USDC. Lighter said this meant only that portion of LLP deposits could be exposed if auto-deleveraging occurred.

As ARC’s price fell around 6 p.m. ET on February 26, the large long position was first liquidated on the order book for roughly $2 million. Lighter said LLP was initially in profit on the position, but further downside depleted Strategy #7, triggering another ADL at 0.071123. In the end, the whale lost about $8.2 million, LLP lost its capped $75,000 allocation, and short traders who held their positions were profitable.

ARC Price Collapse

The unwind left visible scars on the ARC price chart, with data from CoinGecko showing the token experienced a flash crash in the early hours of February 27, sliding from around $0.031 to $0.025 before recovering to $0.0348.

At the time of writing, ARC, which powers the Ryzome agentic AI “app store,” was down over 9% in 24 hours and nearly 59% across seven days. The token has also lost more than 63% of its value in the past two weeks, as well as falling 42% over 30 days. It currently sits 95% below its January 2025 all-time high of $0.62, having shed nearly 88% off its price in the past year.

This turbulence matches up with observations from crypto commentator Simon Dedic, who noted that ARC’s value had dipped overnight by about 80% on volumes approaching $400 million, which was nearly ten times its fully diluted valuation.

Dedic pointed out that before dumping, the token had been “massively outperforming” despite a weak market, even suggesting it had been “heavily manipulated.”

The concerns raised by Dedic echo a broader industry debate about market integrity. Just last month, Base co-founder Jesse Pollak rejected the idea of behind-the-scenes manipulation, stating his team won’t coordinate or deploy capital to influence prices because markets “deserve to be free, open, and fair.”

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