Decentralized liquid staking protocol Lido Finance recently informed users affected by a platform issue that it plans to reimburse the losses incurred. In their last post on X, Lido attributed the adverse experience to an incorrect quote from Aave’s CAPO oracle.
No problems for wstETH and Lido
According to Lido, the Aave CAPO oracle quoted an incorrect wstETHUSD price limit for AAVE markets. The wrong figures led to several liquidations; the platform claimed it had no bad debts. Lido assured all affected users that it would fully reimburse them for losses resulting from the incident.
In the meantime, Lido clarified that the incorrect price limits that caused Lido Finance’s liquidation have nothing to do with wstETH as an underlying asset. It further emphasized that the issue is not related to wstETH or the Lido Protocol. Meanwhile, the project assured users of the security of the platform and stated that Lido Earn products, STRATEGY and GGV are not affected by the recent liquidations.
What really happened?
Before Lido’s statement, Chaos Labs founder Omer Goldberg had posted about the issue, describing it as a misconfiguration of Aave’s CAPO oracle. According to Goldberg, the event led to E-Mode’s liquidations, resulting in a loss of 345 $ETH.
Goldberg further explained the technical details, highlighting the functions of the Risk Oracle and its role in securing loans and increasing the efficiency of Aave’s infrastructure. According to Goldberg, Risk Oracles have been incident-free since launching over a year ago, despite streaming more than 1,200 payloads for approximately 3,000 parameters.
Meanwhile, the Aave CAPO system attempts to prevent a known Oracle exploit vector involving artificially inflated exchange rate values and donation attacks. According to Goldberg, the problem was a miscalculation, which prevented CAPO from correctly calculating and submitting the minimum exchange rate and growth rates.
Related: VanEck submits an application for a Lido $ETH ETF, seeking regulated exposure to sETH
Disclaimer: The information in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses arising from the use of said content, products or services. Readers are advised to exercise caution before taking any action regarding the company.