A configuration incident in Aave’s oracle system triggered roughly $26 million price of liquidations after the protocol briefly priced wstETH about 2.85% beneath its precise trade fee.
The discrepancy induced some leveraged debtors’ positions to look undercollateralized, resulting in computerized liquidations, in response to a brand new report from Chaos Labs.
The issue got here from a mismatch between the snapshot ratio and the snapshot timestamp, the 2 parameters in Aave’s CAPO oracle system.
The offchain system meant to replace the snapshot ratio to replicate the trade fee from seven days earlier, however an onchain constraint restricted will increase to three% each three days. In consequence, the ratio may solely be partially up to date whereas the timestamp nonetheless mirrored the total seven-day adjustment.
This misalignment induced the CAPO components to calculate a most trade fee decrease than the precise market fee, successfully pushing the oracle worth down.
The occasion resulted in roughly 10,938 wstETH in liquidations throughout 34 accounts. Third-party liquidators captured roughly 499 ETH in mixed bonuses and income, although the protocol itself didn’t accumulate dangerous debt.
To mitigate the state of affairs, Aave briefly decreased the borrow caps, corrected the oracle configuration, and restored the correct trade fee.
Since then, about 141 ETH has been recovered by means of BuilderNet refunds, together with round 13 ETH in liquidation charges, which shall be used to assist compensate affected customers. The DAO treasury will cowl any remaining shortfall.
