The DeFi lending protocol Moonwell has issued an official statement regarding an incident that resulted in approximately $1.78 million in bad debt due to an oracle configuration error. The statement confirms that a critical misconfiguration in the oracle caused the system to incorrectly calculate the price of cbETH using only the cbETH/ETH exchange rate, rather than the intended cbETH/ETH × ETH/USD calculation. This resulted in a cbETH price quote of approximately $1.12, instead of its true market value of around $2,200. As a result, attackers were able to liquidate 1 cbETH by repaying only about $1 in debt, leading to widespread liquidation of borrowers' collateral and significant bad debt. In total, 1,096.317 cbETH were liquidated, the majority of which constituted bad debt denominated in cbETH. Due to the requirement of a five-day governance vote and time lock for oracle fixes, liquidations continued during this period. The corresponding governance proposal to resolve the issue is now scheduled for deployment.
Moonwell Issues Official Statement on Oracle Mismatch, Governance Fix Proposal Scheduled
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Summary
Moonwell confirmed a critical oracle error that resulted in $1.78 million in bad debt due to an incorrect cbETH price. The system used cbETH/ETH instead of cbETH/ETH×ETH/USD, reporting $1.12 instead of $2,200. Attackers exploited this flaw to liquidate 1,096.317 cbETH. A governance fix is scheduled for deployment following a five-day voting period. The ETH price remains under close monitoring as other altcoins react to the incident.
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