A misconfigured Oracle system in Aave triggered $27 million in forced liquidations on March 10, undervaluing wrapped staked Ether by 2.85% against its actual market rate.
According to the post-mortem by Chaos Labs, the CAPO oracle error caused Aave V3 Ethereum Core and Prime instances to apply an exchange rate of roughly 1.1939 wstETH-per-ETH when the live onchain rate was approximately 1.228, enough of a gap to push 34 high-leverage E-Mode positions below their liquidation thresholds automatically.
It resulted in the liquidation of 10,938 wstETH. The protocol says it incurred no bad debt and is moving to compensate all affected users.
The Damage: 34 Users, $27M in Liquidations, and 499 ETH in Bot Profits
The oracle glitch liquidated 34 users, with the total volume reaching $27 million in wstETH positions.
Liquidation bots moved quickly, capturing 499 ETH in bonuses, approximately $1.2 million, by executing against positions that should not have been eligible for liquidation at that moment.
Aave founder and CEO Stani Kulechov confirmed in a Wednesday post that the protocol generated no bad debt from the incident.
Of the 499 ETH that went to liquidators, Aave recaptured 141 ETH ($285,000) through BuilderNet refunds and an additional 13 ETH in liquidation fees.
Those recovered funds will flow directly to affected users as compensation, with DAO treasury funds covering any remaining shortfall up to the full 345 ETH identified as the excess liquidation windfall.
Lido contributors confirmed the event had no connection to wstETH or the Lido staking protocol itself; the issue originated entirely within Aave’s oracle configuration layer.
With
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