Roughly $27 million in positions were liquidated on the decentralized lending protocol Aave over the past 24 hours.

Market observers said this might have been a temporary pricing glitch tied to the token wrapped staked Ethereum (wstETH).

Data flagged by risk management firm Chaos Labs showed a sudden spike in liquidations, raising questions about whether a pricing discrepancy within Aave’s oracle infrastructure may have briefly misvalued collateral used in loans.

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Decentralized lending platforms like Aave rely heavily on price oracles, which feed real-world market data into blockchain applications.

These oracles help determine whether a borrower’s collateral remains sufficient to back their loan. If the value of the collateral falls below a required threshold, the position can be automatically liquidated.

In this case, some observers believe the issue was related to wstETH, a token issued by Lido that represents staked Ethereum (ETH) and accrues staking rewards over time.

At the time of the liquidations, Aave’s risk oracle appeared to value wstETH at around 1.19 ETH, while broader market pricing suggested the token was closer to 1.23 ETH, according to analysis shared by LTV Protocol on X.

That discrepancy meant the protocol temporarily treated the token as less valuable than it actually was, pushing certain borrowing positions below their safety thresholds and triggering liquidations.

Trading volumes for wstETH remained relatively low during the event, around $10 million over the past 24 hours, making it unlikely traders were able to exploit the pricing gap before it corrected.

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Chaos Labs later clarified that the underlying risk oracle itself was functioning correctly. Instead, the liquidations were triggered by a configuration issue in Aave’s CAPO risk oracle system, which regulates how quickly the value of yield-bearing assets can increase.

The problem stemmed from a mismatch between stale parameters stored in a smart contract, including an outdated reference exchange rate and its timestamp.

Because those values were not updated simultaneously, the CAPO system temporarily calculated a maximum allowable exchange rate for wstETH that was lower than the actual market price.

This caused the protocol to treat wstETH as about 2.85% less valuable than its true value, triggering liquidations across several borrowing positions.

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Despite the liquidation surge, Aave founder Stani Kulechov wrote in a post on X that the incident did not cause any systemic damage.

“There was no impact to the Aave Protocol."

Chaos Labs confirmed the protocol incurred no bad debt, though liquidators, typically automated bots that repay risky loans, earned roughly 499 ETH in liquidation bonuses and profits during the event.

“Risk oracles are critical infrastructure for Aave and have secured hundreds of billions in loans, liquidations, and markets since go-live,” Chaos Labs CEO Omer Goldberg said in a post on X.

“Every affected user will be fully reimbursed.”

A contributor from Lido also emphasized that the issue had nothing to do with wstETH or the Lido protocol itself, noting that the staking system continued operating normally during the incident.

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This story was originally published by TheStreet on Mar 11, 2026, where it first appeared in the Trading News & Analysis section. Add TheStreet as a Preferred Source by clicking here.