TLDR
- An oracle pricing malfunction on Aave resulted in approximately $27 million worth of liquidations on March 10, 2026.
- The technical fault impacted wstETH, Lido’s staking derivative, causing its price to display roughly 2.85% lower than actual market value.
- Approximately 34 user positions were incorrectly liquidated due to the pricing discrepancy.
- Liquidators earned around 499 ETH by capitalizing on the oracle miscalculation.
- Risk management firm Chaos Labs has verified zero bad debt was incurred and guaranteed complete user reimbursement.
On March 10, 2026, leading decentralized finance protocol Aave experienced a critical oracle misconfiguration that resulted in approximately $27 million worth of liquidations impacting roughly 34 user wallets. The malfunction stemmed from a technical glitch in how the platform calculated the value of wstETH, Lido’s wrapped staked ether token.
Price oracles serve as essential infrastructure that delivers external market data to blockchain-based protocols. Aave depends on these data feeds to monitor collateral values securing user loans. When collateral valuations drop beneath mandatory thresholds, the system triggers automatic liquidations.
The malfunction occurred within Aave’s Correlated Asset Price Oracle (CAPO). This specialized mechanism aims to prevent extreme price volatility by restricting the rate at which yield-generating token values can appreciate.
CAPO employs a snapshot ratio combined with a snapshot timestamp to determine the maximum permissible exchange rate. During this incident, these two critical values became desynchronized.
According to Chaos Labs, which serves as Aave’s lead risk management partner, an off-chain procedure attempted to adjust the snapshot ratio to approximately 1.2282. Unfortunately, an on-chain governance rule restricts this ratio to increasing by merely 3% within any three-day window.
Since the adjustment couldn’t be executed through a single transaction, the snapshot ratio and its corresponding timestamp became misaligned. This desynchronization forced CAPO to derive a capped exchange rate of roughly 1.1939, significantly beneath the genuine market rate of approximately 1.228.
Essentially, the system incorrectly valued wstETH at about 2.85% below its true market price. This artificial devaluation caused numerous borrowing positions to appear undercollateralized, triggering unwarranted liquidations.
What Happened to Affected Users
Approximately 10,938 wstETH tokens were liquidated spanning 34 different accounts. Liquidation bots and traders—who automatically repay at-risk loans in return for discounted collateral—secured roughly 499 ETH in combined bonuses and earnings.
Chaos Labs verified that the Aave protocol itself incurred zero bad debt from this incident. Aave Labs founder and CEO Stani Kulechov stated on X that there was “no impact to the Aave Protocol.”
A Lido protocol contributor clarified to CoinDesk that the problem was entirely unrelated to wstETH itself or Lido’s infrastructure, which functioned properly throughout the duration of the event.
Compensation Plan
Chaos Labs acted swiftly by decreasing wstETH borrowing limits and manually recalibrating the snapshot parameters to restore accurate oracle pricing.
A comprehensive compensation initiative is currently in motion. Chaos Labs reported recovering 141.5 ETH from the incident and will allocate up to 345 ETH from Aave DAO’s treasury to fully compensate affected users for their losses.
“Every affected user will be fully reimbursed,” said Omer Goldberg, CEO of Chaos Labs.
wstETH recorded only $10 million in trading volume during the 24-hour period surrounding the incident, indicating minimal market exploitation occurred before the pricing error was rectified.
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