A misconfigured Oracle system in Aave triggered $27 million in compelled liquidations on March 10, undervaluing wrapped staked Ether by 2.85% in opposition to its precise market price.
In line with the autopsy by Chaos Labs, the CAPO oracle error prompted Aave V3 Ethereum Core and Prime situations to use an change price of roughly 1.1939 wstETH-per-ETH when the dwell onchain price was roughly 1.228, sufficient of a spot to push 34 high-leverage E-Mode positions under their liquidation thresholds routinely.
It resulted within the liquidation of 10,938 wstETH. The protocol says it incurred no dangerous debt and is shifting to compensate all affected customers.
The Injury: 34 Customers, $27M in Liquidations, and 499 ETH in Bot Earnings
The oracle glitch liquidated 34 customers, with the overall 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 submit that the protocol generated no dangerous debt from the incident.
1/ stETH CAPO Misconfiguration
Immediately, a misconfiguration on Aave's CAPO oracle prompted wstETH E-Mode liquidations, leading to a lack of 345 ETH.
No dangerous debt was incurred, and all affected customers will likely be totally reimbursed.
Extra under.— Omer Goldberg (@omeragoldberg) March 10, 2026
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.
These recovered funds will circulate on to affected customers as compensation, with DAO treasury funds overlaying any remaining shortfall as much as the total 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 value defending the $2,000 assist 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: Right here Is What They Discovered
Chaos Labs, Aave’s exterior danger administration accomplice, confirmed the incident stemmed from what it described as an onchain configuration misalignment underneath differing onchain replace constraints, not a design flaw within the CAPO system or within the core oracle infrastructure of Aave.
The workforce emphasised that Chaos Threat 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 decreased 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 workforce’s response pace in limiting broader DeFi danger contagion.
The Aave governance autopsy marks this as the primary operational failure in CAPO’s deployment historical past on Aave V3, regardless of greater than a yr of dwell operation throughout a number of markets.
What Merchants and Aave Customers Are Watching Subsequent
The quick focus is on the total reimbursement timeline. Aave DAO service suppliers are finalizing compensation for all 34 affected customers following the preliminary 141 ETH refund through BuilderNet, with a proper governance announcement anticipated shortly.
Past compensation, governance groups are conducting a broader evaluation of CAPO parameters throughout all Aave markets, updating stale snapshots and constructing out enhanced monitoring to flag price divergences earlier than they attain liquidation-threshold proximity.
Whether or not that evaluation produces binding parameter replace requirements or stays advisory is the governance query to look at.
If the DAO formalizes automated CAPO sync necessities and publishes up to date danger oracle documentation, the incident might finally strengthen Aave’s operational credibility. If the evaluation stalls on the dialogue stage, the reputational value will compound the monetary one.
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The submit Aave Oracle Glitch Causes $27M Liquidations: CAPO Misconfiguration Confirmed appeared first on Cryptonews.
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