A glitch in Pyth’s crypto data network platform caused a drop in Bitcoin prices of nearly 90% Monday. However, this was only for a short time. The glitch was not visible on any other platform.
Bitcoin’s price was $5,402 at 5:50 PM Monday. It was hovering around $41,000 in centralised exchanges when it was at $5,502 on the Pyth platform.
Pyth, a DeFi developer pricing tool, was launched on the Solana Blockchain. It draws market data from traders and exchanges to provide pricing information. Pyth is a real-time market data provider and is associated with many of the most prominent names in crypto, and finance.
It draws data from financial giants such as Sam-Bankman Fried’s FTX and CoinShares, Jane Street, Jump Trading Group and Virtu Financial.
Pyth published a Wednesday report detailing the root cause of the incident. It explained how the flash-crash was caused by a combination two factors.
The report stated that the issue was caused by (1) two Pyth publishers publishing a close-zero price of BTC/USD, and (2) the aggregation algorithm overweighting these publishers’ contributions. Both publishers also encountered problems with the handling decimal numbers.
First publisher discovered a bug. The utility reported the floating-point price, which was not what it expected. The utility converted the floating point number to an integer and published it.
According to the report, the second publisher encountered a race condition that caused them to read an exponent of 100 in BTC/USD instead 10-8 for the 2-minute period.
Pyth stated in the post that this incident had impacted “Several Solana programs which depend on Pyth prices”,
Pyth stated that developers are making several improvements to decrease the chance of incorrect prices being displayed on the platform due to software errors. Pyth also stated that developers are improving monitoring tools to enable publishers to quickly respond to any anomalous data.
Although prices were back to normal on Tuesday, Pyth was subject to a strong backlash via social media.
One netizen asked why Pyth was still operating. LinkGeneraI replied in a tweet, “It’s an absolute liability to have even a small potential for that to happen again.”
Bonfida is a project that was based on Solana. It tweeted that the flash crashed ’caused several liquidation events on Audaces protocol BTC/PERP market (unfortunately not working as intended). Bonfida is the perpetual futures platform’s liquidation engine Audaces.
This is Pyth’s second problem in recent years. The network was down for 17 hours last week.