Aave recorded about $27 million in liquidations after an oracle configuration error disrupted pricing on March 10, 2026. The incident affected the protocol’s Ethereum Core and Prime deployments, hitting roughly 34 accounts and forcing the closure of more than 10,900 loan positions. Most of the liquidated positions were high-leverage E-Mode exposures tied to wstETH.
CAPO pricing settings fell out of sync
The trigger was not a broad market sell-off. It came from CAPO, Aave’s internal Capped Asset Price Oracle, a risk-control tool designed to limit how quickly certain asset prices can move upward inside the system. In this case, a “price snapshot” and a “time snapshot” were not updated in sync, causing the protocol to value wstETH at roughly 2.85% below its actual price.
That gap was enough to distort collateral health calculations. Positions that should have remained safe were flagged as undercollateralized, and liquidation bots began selling user collateral automatically. Affected users took losses, while the bots that executed the liquidations generated about 499 ETH in profit.
Compensation plan points to 345 ETH payout
Aave Labs founder Stani Kulechov said the protocol remained safe and that the event did not create bad debt. Chaos Labs, which handles risk management for the protocol, accepted responsibility for the error. CEO Omer Goldberg said that every affected user would be fully reimbursed.
Recovery efforts are already in motion. More than 141 ETH has been recovered through BuilderNet, and the remaining amount is set to come from the Aave DAO treasury. The total reimbursement expected for users is about 345 ETH.
AAVE market metrics stayed relatively stable
Despite the size of the liquidation event, the token’s market reaction was limited. As of March 11, 2026, AAVE was trading at $109.39, down 3.04% over the previous week. The protocol continued to hold $27.31 billion in total value locked, while 24-hour trading volume stood near $334 million.
The episode highlights a familiar weakness in DeFi infrastructure: a safety mechanism can still cause damage if its configuration breaks. In Aave’s case, the protocol says the core system remained intact, liquidity stayed in place, and reimbursement is underway.