Polynomial cease operations: forced liquidation timeline and user actions
According to Foresight news, DeFi derivatives protocol Polynomial announced it has ceased operations and entered a winding‑down phase, with plans to restart the project in the future. The notice emphasizes an orderly process and continued communication during the shutdown.
Per AICoin, the forced liquidation timeline begins on February 18, 2026. The liquidity layer is set to close on February 24, 2026, with a full chain shutdown scheduled for March 3, 2026. AICoin also reports the principal issue cited was insufficient liquidity relative to market demands.
Users can monitor unsettled positions as forced liquidations start and confirm balances once settlements complete. Withdrawals are expected to remain available until the liquidity layer closure and prior to the final shutdown date.
Why it matters: DeFi derivatives liquidity and execution gaps
The case highlights a structural challenge in on‑chain derivatives: the need for deep, continuous liquidity to support efficient execution, risk offsets, and orderly liquidations. When liquidity fragments across venues or remains thin, slippage and funding imbalances can undermine market quality.
Execution gaps compound the problem. Latency, oracle dependencies, and collateral management can widen spreads and reduce fill quality versus centralized counterparts. Even with a sound strategy, underpowered liquidity and execution often fail to reach critical mass in this segment.
For users and counterparties, forced liquidations test the protocol’s risk engine and settlement reliability. Clean wind‑downs help limit tail risks, preserve user confidence, and provide a baseline for any future relaunch.
Relaunch plans: priorities, user access, and data-driven approach
As reported by Weex, Polynomial intends to analyze historical activity to reassess its competitive edge, including learnings from roughly 27 million transactions. The team indicates it will apply standardized shutdown procedures and retain relevant data for evaluation before any restart.
Editorially, the team frames the strategy as directionally correct but execution‑constrained. “Execution fell short of expectations despite a correct core strategic direction,” said Polynomial in its official announcement, as reported by Weex.
Weex also notes that early or backing users are slated for priority access in a prospective relaunch. Any new iteration would likely hinge on demonstrably stronger liquidity formation, improved execution, and clearer market differentiation.
Immediate impact on users and on-chain derivatives market
The immediate impact for users centers on settlements during forced liquidations and timely withdrawals before infrastructure closure. Clear sequencing of events reduces reconciliation risk and supports fund safety throughout the wind‑down.
Withdrawals, settlements, and fund safety during the wind-down
Users can expect positions to be liquidated according to the published schedule, then settled on‑chain before balances become fully withdrawable. Fund safety depends on precise execution of liquidation rules, order routing, and custody logic during each shutdown phase.
What analysts and media highlight about liquidity model risks
Industry media AInvest has framed the drop in TVL and trading activity as evidence of a failed liquidity model, cautioning that relaunch plans are speculative and “priority access” signals preference, not value. The interpretation underscores that liquidity depth, not features alone, will likely determine viability.
FAQ about Polynomial cease operations
How will the forced liquidation process work and how can I withdraw or secure my funds?
Liquidations start February 18, 2026, followed by settlements. Withdrawals are expected before the liquidity layer closes February 24 and the full shutdown on March 3.
Why is Polynomial shutting down, was insufficient liquidity the main reason?
Yes. AICoin reports insufficient liquidity as the principal issue, with execution gaps limiting scale in a liquidity‑intensive derivatives market.
| DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing. |
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