Aave Oracle Glitch Causes $27M Liquidations: CAPO Misconfiguration Confirmed
A misconfigured Oracle system in Aave triggered $27 million in pressured liquidations on March 10, undervaluing wrapped staked Ether by 2.85% in opposition to its precise market charge.
According to the post-mortem by Chaos Labs, the CAPO oracle error brought about Aave V3 Ethereum Core and Prime situations to use an trade charge of roughly 1.1939 wstETH-per-ETH when the stay onchain charge was roughly 1.228, sufficient of a niche to push 34 high-leverage E-Mode positions beneath their liquidation thresholds mechanically.
It resulted within the liquidation of 10,938 wstETH. The protocol says it incurred no unhealthy debt and is transferring to compensate all affected customers.
The Damage: 34 Users, $27M in Liquidations, and 499 ETH in Bot Profits
The oracle glitch liquidated 34 customers, with the entire quantity reaching $27 million in wstETH positions.
Liquidation bots moved rapidly, capturing 499 ETH in bonuses, roughly $1.2 million, by executing in opposition to positions that ought to not have been eligible for liquidation at that second.
Aave founder and CEO Stani Kulechov confirmed in a Wednesday put up that the protocol generated no unhealthy debt from the incident.
Of the 499 ETH that went to liquidators, Aave recaptured 141 ETH ($285,000) via BuilderNet refunds and an extra 13 ETH in liquidation charges.
Those recovered funds will movement on to affected customers as compensation, with DAO treasury funds protecting any remaining shortfall as much as the complete 345 ETH recognized as the surplus liquidation windfall.
Lido contributors confirmed the occasion had no connection to wstETH or the Lido staking protocol itself; the problem originated completely inside Aave’s oracle configuration layer.
With Ethereum price defending the $2,000 support zone across the time of the incident, the liquidation values have been amplified by the broader market context for ETH-denominated collateral.
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Chaos Labs Confirms Aave CAPO Oracle Misconfiguration: Here Is What They Found
Chaos Labs, Aave’s exterior threat administration companion, confirmed the incident stemmed from what it described as an onchain configuration misalignment below differing onchain replace constraints, not a design flaw within the CAPO system or within the core oracle infrastructure of Aave.
The crew emphasised that Chaos Risk Oracles had processed over 1,200 payloads and greater than 3,000 parameters throughout Aave markets with out incident previous to March 10.
Chaos Labs rapidly contained the state of affairs: borrow caps on wstETH have been diminished instantly, and snapshot parameters have been manually realigned to revive oracle accuracy. Kulechov famous in his public assertion that the configuration concern had already been remediated by the point the autopsy was revealed, and praised the crew’s response pace in limiting broader DeFi threat contagion.
The Aave governance post-mortem marks this as the primary operational failure in CAPO’s deployment historical past on Aave V3, regardless of greater than a 12 months of stay operation throughout a number of markets.
What Traders and Aave Users Are Watching Next
The instant focus is on the complete reimbursement timeline. Aave DAO service suppliers are finalizing compensation for all 34 affected customers following the preliminary 141 ETH refund by way of BuilderNet, with a proper governance announcement anticipated shortly.
Beyond compensation, governance groups are conducting a broader overview of CAPO parameters throughout all Aave markets, updating stale snapshots and constructing out enhanced monitoring to flag charge divergences earlier than they attain liquidation-threshold proximity.
Whether that overview produces binding parameter replace requirements or stays advisory is the governance query to observe.
If the DAO formalizes automated CAPO sync necessities and publishes up to date threat oracle documentation, the incident might finally strengthen Aave’s operational credibility. If the overview stalls on the dialogue stage, the reputational value will compound the monetary one.
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