Preliminary of EMDXGames.
On April 12th at 7 pm UTC, EMDX kicked off the first in 3-series trading competition. Traders registration ended 24hs before the competition starting time, and right before the competition started almost 4k registered users got their wallets funded with 1k xUSDC.
According to EMDXGames’ rules, bot traders were absolutely allowed likewise human traders.
Simultaneously, given that EMDX testnet stage is still ongoing, we are not able to use arbitrage bots like in a real trading environment. In order to follow index prices in each perp market we did set up two internal bots that are opening short and long positions to keep mark price as close as possible to the spot price (provided by Chainlink oracles on Fuji-C)
On the other hand, the presence of bots is a very healthy element, because they help with the most critical aspect of an exchange: LIQUIDITY.
A coordinated pump action.
At roughly 3:45 PM UTC on Apr 13th, the AVAX/USDC Perp Market suffered from a coordinated pump action coming from a set of addresses that moved the price up from about usdc 76 to 88 USDC in less than 1 minute, while our price convergence bots were unable to respond timely.
But, why couldn’t our bots control this market manipulation event?
The reason is that a gruop of users transfered funds from many registered wallets to another one (breaking an EMDXGames rule that prohibited these movements between accounts) accumulating a high amount of funds (about 10k USDC). They used this concentrated buying power to start pumping the price on the AVAX/USDC perp market.
Immediately after, our bots were recalibrated to send higher order sizes and after a matter of seconds the price was again in line with the index price.
Unfortunately, a second coordinated attack came in, and AVAX Perp mark price skyrocketed again hitting nearly 92 USDC, for a few seconds when EMDX bots were again able to close the gap between prices.
The obvious consequence of these extremely high price movements were that many traders (about 150) got liquidated and many others had to close their positions at a loss.
Measures taken by EMDX team.
At EMDX we took the following measures:
a. Stopping the attack and controlling the market
Most of the addresses involved in the coordinated pump action were identified, banned from the competition and their balances were burnt.
b. Compensating traders
The team decided to set 2 timeframes within the market malfunctions (that took place starting at 15:41–16:33, blocks 8508930–8510420 and 17:37–18:03 8512206–8513006) and we filtered and identified all the affected wallets
Then, we looked at the liquidated amounts that were took over by keepers and those sent to the insurance funds within this timeframe, and sent them back to the affected wallets.
c. Preventing futures attacks
We started monitoring suspicious activity that came for a set of addresses and certain misconducts carried out by a group of Discord users, banning many of them.
d. Upcoming Measures
The USDC 100 + EMDX 1000 trading rewards originally established for the position range from #6-#50, will be extended to the position range from #6 — #100.
We will submit a proposal for our community to vote if they are willing to participate in another trading competition where only human traders can participate.
The EMDX team apologizes to any trader who may feel that these decisions did not fully amend their condition. As far from ideal as this measures may seem, we did our best to please all fair competitors.
Finally, we want to thank all those who have been supporting us along the way!
