About $36 million in liquidations hit lending platform Morpho after a roughly 3% move in a Pendle-linked token, according to CoinDesk. The move began when one wallet heavily bought YT-reUSD, a yield token issued by Pendle, pushing the implied annualized yield to 20% before quickly selling. That selloff drove the price of the corresponding principal token, PT-reUSD, down by about 3%.
Before the drop, some traders had been using PT-reUSD as collateral on Morpho, borrowing the stablecoin USDC and then buying more PT-reUSD in a looping strategy. Those leveraged positions were left with less than 3% liquidation buffer. Morpho uses an oracle pricing model that takes the lower of the token’s 15-minute average market price and a fixed path that gradually converges to $1 by maturity. Once the market price fell below that curve, liquidations were triggered.
Pendle said the price source had been configured correctly and worked as designed. Steakhouse Financial, which manages the related lending market, said lenders in its vault were unaffected, no bad debt was created, and liquidation proceeds were enough to repay the loans. The firm added that it withdrew funds during the investigation and later redeployed them, while the underlying asset reUSD was not affected.
About $36 million in liquidations were triggered on lending platform Morpho after a roughly 3% token price swing, according to CoinDesk.
What set off the move
The episode started when one wallet heavily bought YT-reUSD, a yield token issued by Pendle, pushing the implied annualized yield to 20% before quickly selling. That move sent the corresponding principal token, PT-reUSD, down by about 3%.
Before that drop, some traders had deposited PT-reUSD into Morpho, borrowed the stablecoin USDC, and used the proceeds to buy more PT-reUSD in a looping strategy. Those leveraged positions were left with less than 3% of liquidation buffer.
How Morpho handled pricing
Morpho uses an oracle-based price model that takes the lower of two values: the 15-minute average trading price of PT-reUSD and a fixed path under which the token gradually converges toward $1 by maturity. Once the market price fell below that curve, liquidations were triggered.
Pendle said the price source was configured correctly and functioned as designed.
Response from Steakhouse Financial
Steakhouse Financial, which manages the related lending market, said lenders in its vault were not affected, no bad debt was created, and liquidation proceeds were sufficient to repay the loans.
The firm also said it withdrew funds during the investigation and later redeployed them. The underlying asset, reUSD, was not affected.
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