Aave wstETH glitch forces $27M in liquidations and compensation

Capo, an external oracle solution used by Aave, triggered around $27 million in liquidations after a pricing glitch, but the lending platform said is stepping in to cover the losses.

A configuration error in a risk-oracle system used by crypto lending platform Aave triggered the liquidation of about $27 million in wrapped staked Ether (wstETH) positions, prompting the protocol to move to compensate affected users.

In a post-mortem published Tuesday, Aave said about 10,938 wstETH worth around $27.1 million was liquidated after the protocol applied an exchange rate that was 2.85% below the live market rate for wstETH and Lido staked Ether.

The issue stemmed from a misalignment between a snapshot ratio and a snapshot timestamp in the Capo risk-oracle configuration, which caused the system to calculate a maximum allowed exchange rate below the actual rate onchain.

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