Catenaa, Thursday, February 26, 2026- DeFi lending protocol Moonwell said it suffered about $1.78 million in bad debt after an oracle misconfiguration mispriced Coinbase Wrapped ETH on its Base market Feb. 15, triggering rapid liquidations before the issue was corrected.
The error occurred after governance proposal MIP-X43 enabled Chainlink OEV wrapper contracts across core markets on Base and Optimism. A configuration mistake calculated cbETH’s USD value using only the cbETH to ETH ratio. It failed to multiply by the ETH to USD price feed.
As a result, cbETH was shown at about $1.12 instead of roughly $2,200. Liquidation bots quickly repaid small debts to seize large amounts of collateral.
Moonwell said 1,096.317 cbETH was liquidated. The incident left $1,779,044.83 in bad debt across several assets, mostly tied to cbETH.
The protocol detected the discrepancy within minutes. It reduced supply and borrow caps for the affected cbETH market on Base to 0.01, blocking new borrowing and deposits. Other markets on Base and OP Mainnet were not affected.
Fixing the oracle required a governance vote and timelock process. Liquidations continued until a formal patch could be approved.
The event drew scrutiny after code commits linked to the change listed AI assistance. Security researchers said the flaw was a basic pricing formula mistake, not a novel exploit. Others noted proper testing should have caught it regardless of authorship.
Moonwell has faced prior oracle disruptions. In late 2025, pricing discrepancies caused millions in liquidations and additional bad debt.
