ChainCatcher message: DeFi lending protocol Moonwell released an official statement regarding an incident where approximately $1.78 million in bad debt occurred due to an oracle configuration error. The statement confirms that a serious error in one oracle configuration caused the system to fail to calculate the cbETH price as expected using cbETH/ETH × ETH/USD, and instead only used the cbETH/ETH exchange rate. This resulted in a cbETH quote of about $1.12 instead of the true market price of approximately $2,200. Attackers could liquidate 1 cbETH with only about $1 of debt repayment, causing a large number of borrower collateral assets to be liquidated and creating significant bad debt. In total, 1,096.317 cbETH were liquidated, most of which were bad debt denominated in cbETH.
Since fixing the oracle requires a five-day governance voting and timelock process, liquidations continued during this period. The relevant fix governance proposal has now been planned for deployment.
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