How a 2.85% price error triggered $27M in liquidations on Aave
A small pricing error in wstETH collateral caused $27 million in Aave liquidations, highlighting the critical role of price oracles and automated risk systems in DeFi.
A temporary 2.85% pricing discrepancy in wstETH collateral triggered about $27 million in liquidations on Aave, showing how even small technical issues can have major financial consequences in automated DeFi lending systems.
The liquidation wave occurred because Aave’s system briefly valued wstETH at about 1.19 ETH instead of its market value near 1.23 ETH, making some borrowing positions appear undercollateralized.
Price oracles are critical infrastructure in DeFi because they feed external market data to smart contracts, determining collateral values, loan health and when automated liquidations should occur.