Aave Experiences $27 Million Liquidation Due to Pricing Glitch

A recent glitch on the decentralized lending platform Aave led to the automatic repayment of $27 million worth of positions. The issue was caused by a configuration error in the protocol's CAPO risk oracle system, which temporarily misvalued collateral used in loans.

According to Chaos Labs, the problem stemmed from a mismatch between stale parameters stored in a smart contract, including an outdated reference exchange rate and its timestamp. This caused the protocol to treat wstETH as about 2.85% less valuable than its true value, triggering liquidations across several borrowing positions.

Aave's founder Stani Kulechov assured that the incident did not cause any systemic damage, and Chaos Labs confirmed that the protocol incurred no bad debt. The firm also stated that every affected user will be fully reimbursed.