| Key Points: – CAPO misconfiguration undervalued wstETH by ~2.85%, triggering mass liquidations. – 34 accounts liquidated, 10,938 wstETH affected; liquidators earned about 499 ETH. – No protocol bad debt; issue tied to on-chain limit oversight. |
As reported by The Block, a misconfiguration in Aave’s Correlated Asset Price Oracle (CAPO) caused wstETH to be temporarily undervalued by roughly 2.85%. The snapshot ratio, which can rise only 3% every three days, was throttled to about 1.1939 while the timestamp advanced as if a higher target near 1.2282 had been applied, distorting the exchange rate. The incident led to liquidations affecting 34 accounts and about 10,938 wstETH, or roughly $26 million, with external liquidators earning about 499 ETH. The figures indicate no protocol bad debt accrued.
According to Parameter.io, contributors emphasized the malfunction was rooted in CAPO’s internal safeguards rather than primary market oracles or Lido’s wstETH mechanics. Leadership attributed the outcome to an on-chain limit that had not been accounted for during an off-chain parameter update, creating a transient mispricing window.
Project communications later focused on continuity of core operations and the bounded scope of impact while risk parameters were realigned. The emphasis was on correcting configuration and reviewing guardrails rather than any flaw in the underlying staking derivative.
“The protocol itself remains unaffected,” said Stani Kulechov, founder of Aave. He described the issue as stemming from an on-chain constraint that was overlooked during an off-chain update process.
Impact: 34 accounts, 10,938 wstETH liquidated; liquidators earned ~499 ETH
The undervaluation pushed certain positions’ health factors below liquidation thresholds even though the collateral asset itself functioned normally. Liquidations executed against temporarily mispriced collateral, concentrating gains to liquidators while leaving users with losses despite the absence of systemic bad debt.
According to Incrypted, LTV Protocol temporarily halted operations in response to the abnormal wstETH valuation on Aave. Its co-founder Andrii Sobol estimated impacted collateral exceeded 10,000 ETH and noted technical misconfiguration as the most likely cause among several considered.
What affected Aave users should know and do next
Reimbursement plan: Chaos Labs recovery, Aave DAO treasury coverage
As reported by Forklog, the risk partner committed to fully reimburse impacted users and has already recovered 141.5 ETH linked to the incident. The remainder is expected to be covered via up to 345 ETH from the aave dao treasury to offset residual losses. Temporary risk controls, including reduced borrow caps and manual parameter realignment, were enacted to restore normal oracle behavior and limit further exposure. These measures frame the intended path to make affected positions whole, subject to governance processes and verification.
Check if impacted: was your wstETH position liquidated unfairly?
Impact assessment typically involves matching liquidation timestamps with the CAPO snapshot update window that produced the mispricing. Users generally compare the wstETH exchange rate used in their liquidation call against the canonical wrap ratio expected for that block. On-chain logs and Aave health-factor histories can indicate whether positions tripped liquidation due solely to the transient undervaluation. Reimbursement procedures are usually communicated through governance and risk channels once recovery accounting is finalized.
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