Key Highlights
A major trading drama played out on decentralized derivatives platform Lighter after a whale’s attempt to push ARC prices higher completely backfired, causing huge losses.
Over several days, the trader built an enormous long position in ARC, far bigger than what the market usually sees. In contrast, about 600 other traders and market makers stepped in on the opposite side, driving total open interest to $50 million USDC.
In an X thread, Lighter reported that the whale started with 8.39 million USDC to buy ARC, eventually creating a $20.45 million position with 210 million ARC tokens. The price jumped briefly to $0.15, which encouraged other whales and traders to sell into the rally. One whale sold 9.8 million ARC at $0.115, making $1.13 million, while still holding 6.4 million ARC worth $303,000.
Eventually, the massive long position collapsed, and the trader withdrew the remaining 3.06 million USDC, finalizing a total loss of approximately $5.3 million USDC initially, with Lighter reporting total losses closer to $8.2 million after final liquidation.
Lighter highlighted how its LLP (Liquidity Protection Program) strategies mitigated risk during the episode. Each market is linked to a strategy with defined USDC allocations. “LLP Strategies limit downside while still maintaining the upside,” the platform explained. During the ARC price drop, the whale’s position first went through the order book liquidation for about 2 million USDC, then leveraged LLP Strategy 7, which had only 75,000 USDC at risk.
On-chain analyst Route 2 FI noted that the whale continued adding $360,000 hourly via TWAP, drawing parallels to the JellyJelly incident on Hyperliquid last year. However, Lighter’s structure prevented unlimited losses on the platform. Short traders betting against the whale benefited from daily APRs of around 5% during the downward price action.
The ARC price dropped sharply during the liquidations, and Lighter’s LLP strategy stepped in, taking on 200 million ARC worth $14.7 million at a price of $0.072867. Even so, the LLP strategy kept losses small, while traders betting against the whale profited.
Overall, Lighter managed to contain the risk, with LLP losing just $75,000. At the time of writing, according to data from CoinMarketCap, Lighter was trading at $1.48, up 3.48% in the past 24 hours on $60.35 million in volume, showing that the market stayed confident despite the big liquidation.
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