Solana-based data network Pyth says a bug caused bitcoin's price to crash 90% to $5,402 on its feed to DeFi developers

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Solana-based data network Pyth says a bug caused bitcoin's price to crash 90% to $5,402 on its feed to DeFi developers
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  • A bug caused bitcoin to plunge 90% on Solana-based network Pyth, which provides pricing data to DeFi developers.
  • Pyth, which gets market data from CoinShares, FTX and other exchanges, briefly showed bitcoin at $5,402 on Monday.
  • "Several Solana programs relying on Pyth prices were impacted by this incident," the network said.
Real-time market data provider Pyth Network said Wednesday a bug caused an error that caused its feed to DeFi developers to show a significantly incorrect price for bitcoin, impacting many solana-run projects.

The network, connected to some of the biggest names in crypto and finance, showed a plunge of about 90% for bitcoin to $5,402 on Monday. Other platforms showed the token trading around $43,000, down 8%.



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Pyth, which launched on the solana blockchain, provides pricing data for DeFi developers' smart contracts by drawing on market activity data from exchanges and professional traders. Its data sources include Sam-Bankman Fried's FTX, CoinShares, Jane Street, Jump Trading Group, and Virtu Financial.

In a Medium post explaining what went wrong, Pyth said the bitcoin pricing incident was caused by a combination of two factors: two data providers publishing a near-zero price for the token, and the network's aggregation logic tool giving too much weight to these contributions.

The data providers ran into problems related to how decimals are handled, Pyth said.

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"Several Solana programs relying on Pyth prices were impacted by this incident," it said in the post.

"The impact was exacerbated due to some programs relying on the aggregate price feed without using the confidence (metric), which allowed liquidations to occur even though the published price was highly uncertain."

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One project built on solana, called Bonfida, tweeted on Monday that the price decline "caused a series of liquidation events on the Audaces protocol BTC-PERP market (unfortunately working as intended)." Audaces is a liquidation engine and Bonfida's perpetual futures platform.

Core developers are making changes to reduce the chances of incorrect prices being generated by software errors, and they are improving monitoring tools, Pyth said.

Bitcoin's price returned to normal on Pyth Wednesday, last displaying a level of $42,322. The digital asset lost ground this week, driven by market worries about the spillover of Evergrande's debt crisis.

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The error on Pyth's decentralized system came in for heavy backlash on Twitter, with some questioning how Pyth is still in operation.

Twenty trading firms, exchanges, and market makers have partnered with the firm as data providers, according to Pyth's website. It added another well-known name to its roster Tuesday, when it announced a partnership with digital assets merchant bank Galaxy Digital to provide data for its DeFi traders.

Read More: A trader who warned of the 2017 and 2021 bitcoin bull market tops shares 4 altcoins he's bullish on for the long-term - but breaks down why Evergrande's crisis is keeping him away from crypto at the moment

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