DeFi lending protocol Moonwell suffered approximately $1.78 million in bad debts due to an oracle misconfiguration.

PANews reported on February 18th that, according to Decrypt, the DeFi lending protocol Moonwell suffered approximately $1.78 million in bad debt due to an oracle misconfiguration. It is understood that after Moonwell enabled Chainlink's OEV wrapper contract via governance proposal MIP-X43 on February 15th, a serious misconfiguration occurred in the cbETH price oracle, causing its valuation to drop to as low as $1. On-chain trading bots and liquidators acted swiftly, seizing cbETH collateral by repaying approximately $1 of debt. This misconfiguration resulted in the liquidation of 1096.317 cbETH, wiping out the vast majority of collateral for many borrowers and leaving the protocol with a large amount of bad debt. The Moonwell team immediately reduced the cbETH borrowing and supply caps to 0.01 after discovering the problem to limit further losses, but the official team has declined to comment further on the source of the error or details of the vulnerability.