TechFlow reports that on February 18, the DeFi lending protocol Moonwell published an official incident statement following approximately $1.78 million in bad debt caused by an oracle configuration error. The statement confirmed that a critical misconfiguration in an oracle led the system to calculate the cbETH price incorrectly—relying solely on the cbETH/ETH exchange rate instead of the intended cbETH/ETH × ETH/USD calculation. As a result, cbETH was quoted at roughly $1.12 instead of its true market price of approximately $2,200. This allowed attackers to liquidate 1 cbETH by repaying only about $1 in debt, triggering mass liquidations of borrowers’ collateral and generating substantial bad debt. In total, 1,096.317 cbETH were liquidated, with most of the bad debt denominated in cbETH.
Since oracle fixes require a five-day governance vote and timelock process, liquidations continued during this period. A related governance proposal for the fix is now scheduled for deployment.
