Exclusively obtained orderbook data reveals details about USDE crash

An oracle vulnerability on Binance contributed to Friday’s market crash, which clocked in as the largest liquidation event in history at $19 B. In this article, Cointelegraph Research analyses newly released forensic orderbook data from the crash.

The recent crash on Oct. 10 was the largest liquidation event in the crypto market’s history. More than $19 B was liquidated, according to CoinGlass data, leading to a $65 B decline in open interest. This number dwarfs other memorable liquidation cascades such as the COVID-19 crash with $1.2 B, or even the FTX collapse at $1.6 B in liquidations. 

In the aftermath, consensus among investigators emerged that the event was at least partially caused by vulnerable pricing oracles on the Binance exchange. The collateral value of three pegged crypto tokens, namely USDE, bnSOL and wBETH, was determined from Binance’s internal orderbook data instead of an external oracle. This puts users of the “Unified Accounts” feature at risk of liquidation during market irregularities.

It is possible that this vulnerability was exploited in a coordinated attack on Oct. 10, but the evidence remains inconclusive. USDE, in particular, contributed to cascading liquidations with an approximate volume of $346 M, compared to wBETH with $169 M and bnSOL with $77 M. The mass withdrawal of buy-side liquidity on a stablecoin pair should be considered especially suspicious. 

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