📍Oracle discrepancy causes Aave to liquidate nearly $27M

positions. A rare incident just occurred on #Aave when about $27M wstETH positions were liquidated in a short period. The cause was not market volatility but the way the system prices collateral assets.
On Aave, each loan is monitored by the Health Factor. When the value of the collateral drops below the safe threshold, the position will be liquidated to protect the liquidity pool.
This incident involved $wstETH, a token representing $ETH staking from Lido. Due to a parameter update error in the @CAPO@ risk oracle, the wstETH exchange rate on Aave was undervalued by about 2.8% compared to the market.
This discrepancy was enough to cause many E-Mode positions to fall below the safe threshold. Since E-Mode allows for high capital efficiency borrowing, the safety margin is quite thin; when the oracle reduces the collateral asset's price by a few percent, the system's automatic liquidation is immediately triggered.
Liquidation bots earned approximately 499 ETH in profits from liquidation bonuses and price differences. However, Aave's pool did not incur bad debt because the collateral assets were still sufficient to cover the loans. The protocol later committed to compensate affected users through the DAO treasury fund.
This event highlights an important point in DeFi lending: significant risks sometimes lie in how the protocol prices collateral assets. Just a few percentage discrepancies in the oracle can lead to mass liquidations of highly leveraged positions.