A large crypto trader lost about $8.2 million on a leveraged long in the ARC perpetuals market on decentralized derivatives venue Lighter after ARC slid around 6:00 pm ET Wednesday, a report said, citing posts from the platform.
We had the first battle test of LLP Strategies in the last several hours. TLDR: it worked as expected and protected LLP holders as well as traders. Deep dive in this thread.
— Lighter (@Lighter_xyz) February 26, 2026
The trader built the position over several days, pushing ARC open interest to roughly $50 million while about 600 traders and market makers took the other side. When the trade started to break, about $2 million was liquidated on the order book and the remainder was shifted into Lighter’s liquidity provider pool (LLP) under a high-risk strategy bucket. Lighter said it then activated auto-deleveraging (ADL), partially closing profitable shorts to unwind exposure. At one point, the LLP briefly held about 200 million ARC, valued at $14.7 million, before the position was reduced further, with LP losses limited to about $75,000.
Lighter said it has since added guardrails, including a $40 million open interest cap on ARC and a capped-liquidity strategy with about $100,000 USDC allocated, with the system set to transition to ADL if that liquidity is exhausted. Stakeholders will watch whether similar caps roll out to other markets and whether a post-mortem tightens risk controls.
Source: Lighter (X).
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