Lighter's New Liquidity Pool System Passes First Major Test with $50M ARC Squeeze

Lighter, a decentralized crypto exchange, recently faced its first major test with the launch of its new liquidity pool (LLP) Strategies system. The platform's upgraded infrastructure successfully limited losses to $75,000 during an attempt to squeeze $50 million in ARC perpetual volume.

The event occurred on February 26 when a trader built a large long position in ARC perpetuals over several days, with around 600 other traders and market makers taking the short side. The total open interest reached $50 million, and ARC's price fell significantly, triggering auto-deleveraging (ADL) at 0.071123.

According to Lighter, only a portion of LLP deposits could be exposed if ADL occurred, as the risk was handled at the strategy level rather than across the entire pool. As a result, the platform's losses were capped at $75,000, while traders who held short positions remained profitable.