$borgchip

Liqwid Finance Emergency Protocol Activation (October 10-11th 2025) Overview Last night the Liqwid Labs engineering team activated its emergency response process following a sudden market-wide price crash affecting ADA and all other crypto-assets. The price alert system notified the core team who promptly connected and began assessing the situation. Note: Liqwid DAO Core Team was granted the right to activate the Pause Guardian via the Admin Multisig under the Emergency Powers granted by the Liqwid DAO through Proposal #44, approved on March 14, 2024 v2.liqwid.finance/governance… Emergency Actions Taken Once a threshold of core team members was assembled: - The Pause Guardian was activated via multi-signature authorization to temporarily freeze protocol operations. - The Liqwid web app was temporarily placed in maintenance mode. - Public communication was issued to inform the community of the pause and the reasons behind it. Key Factors Behind the Decision 1. Binance Order Book Restart Binance, representing roughly 20% of ADA’s centralized exchange market share, experienced a full order book restart. As most ADA oracle solutions (on- and off-chain) rely heavily on Binance data, we opted to pause until Binance’s order book was back to normal operation. 2. On-chain Depeg of Stablecoins (DJED and iUSD) Both DJED and iUSD showed temporary on-chain depegs down to around $0.50. Given Liqwid’s central role in the Cardano DeFi ecosystem — interconnected with multiple protocols and assets — we chose a conservative approach during this period of network contention and overload. 3. Systemic Risk and Unknown Effects Historically, similar flash crashes have triggered cascading failures across protocols. With limited visibility during the event, we prioritized protocol safety and user protection, isolating Liqwid from potential contagion by maintaining the pause. Comment from the Liqwid Team: We are confident that this decision helped prevent widespread cascading liquidations within the Cardano DeFi ecosystem, which remains highly dependent on ADA’s market price (notably from Binance) and on ADA-backed stablecoins. Monitoring and Recovery Between 01:00 and 10:00 CET, as the market began to recover, we continuously monitored: - ADA prices on Binance and other exchanges - Onchain activity and load - Stability of oracle data sources Once Binance restored a fully functioning order book and onchain metrics stabilized, the team conducted a loan liquidation assessment to evaluate potential protocol risks, with $265k debt in the liquidation threshold. After confirming system integrity and ensuring no undue risk remained, Liqwid operations were safely resumed. At approximately 15:30 CET, a 2-hour grace period was provided for users to replenish collateral and restore their loan health. By 17:42 CET, the protocol’s loan book had fully stabilized, 12 minutes after restarting — all positions were either liquidated or once again healthy. Conclusion & Next Steps This event demonstrated the resilience of Liqwid’s emergency framework and the effectiveness of our pause guardian mechanism in protecting user funds and protocol integrity during high volatility. Moving forward, we will: - Review oracle dependency configurations to reduce single-source risk - Enhance monitoring and alert automation for faster incident detection We appreciate the community’s patience and understanding during this event. Our priority remains ensuring security, transparency, and long-term protocol stability for all Liqwid participants. - Liqwid DAO Core Team