Chaos Labs: The approximately $27 million liquidation event in Aave was caused by a CAPO oracle configuration issue.

Crypto World News, March 11 — According to a report by Chaos Labs, a recent liquidation event involving approximately $27 million on Aave was caused by configuration issues with the CAPO risk oracle. The root cause lies in inconsistent update constraints at the smart contract level: the snapshotRatio parameter is limited to a 3% increase every 3 days on-chain, preventing it from directly updating from about 1.1572 to the target value of approximately 1.2282, only allowing an increase to around 1.1919; meanwhile, the snapshotTimestamp was successfully updated to a timestamp from 7 days ago. This mismatch between ratio and timestamp caused the CAPO-calculated exchange rate ceiling (about 1.1939) to be roughly 2.85% below the actual market rate, triggering the liquidation of approximately 10,938 wstETH tokens. The protocol did not incur bad debt in this event. Chaos Labs and BGD Labs immediately lowered the wstETH borrowing limit on affected instances to 1 and manually aligned parameters through Risk Steward to restore the exchange rate. Through BuilderNet, 141.5 ETH has been recovered to compensate affected users, with the remaining amount covered by the Aave treasury. The estimated temporary compensation amount required from the DAO is no more than 345 ETH.