$50 million transaction in permanent ARC volume

Lighter reported that its improved liquidity pool system successfully limited ADL’s losses to predetermined limits.

On February 26, Lighter, a decentralized crypto exchange, announced that its enhanced liquidity pool system had successfully resisted a $50 million permanent squeeze attempt.

This came after nearly 600 traders flipped shark positions, resulting in losses of $8.2 million, and the episode tested LLP Lighter’s newly launched strategies, reducing the liquidity providers’ downside risk by just $75,000.

Strategies of LLCs exposed to the first stress event

In a Feb. 17 post at X, Lighter announced changes to his LLP infrastructure that split liquidity into separate strategies for different market types, including RWAs. Risk, disruption, and automation are now addressed at the strategy level, rather than pool-wide.

The structure faced what the platform called its “first test of war” on February 26. According to Lighter, one trader has permanently built a large position in ARC in a matter of days, and about 600 other traders and market makers have taken the short side, pushing total open interest to $50 million.

The ARC trade is allocated to Strategy #7, a high risk strategy with approximately $75,000 in USDC. Lighter said this simply means that a portion of the LLC’s deposits may be exposed if an automatic transfer occurs.

When the price of ARC dropped around 6:00 PM ET on February 26, the first large position in the order book was liquidated by about $2 million. Lighter said that LLC initially benefited from this position, but subsequent downside has exhausted Strategy #7 and created another ADL at 0.071123. In the end, the whale lost about $8.2 million, LLC lost the maximum distribution of $75,000, and the short traders who held their positions profited.

ARC price drop

The crash left visible scars on the ARC price chart, with data from CoinGecko showing that 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.

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At the time of writing, ARC, which powers Ryzome’s AI agent “app store,” is down more than 9% in 24 hours and nearly 59% in seven days. The token has also lost more than 63% of its value in the last two weeks and has also dropped 42% in 30 days. It is currently 95% below its record high of $0.62 since January 2025, and has lost nearly 88% in the past year.

This volatility is in line with the observations of crypto commentator Simon Dedick, who noted that ARC’s value has soared nearly 80% overnight to close to $400 million, nearly ten times its full valuation.

Dedik noted that before the dumping, the token was “massively outperformed” despite the weak market and even hinted that it was “heavily managed”.

The concerns raised by Dedick feed back into the industry’s broader debate about market integrity. As recently as last month, Base co-founder Jesse Pollack dismissed the idea of ​​behind-the-scenes manipulation, saying his team does not coordinate or deploy capital to influence prices because markets are “fair, free, open and fair.”