The lending protocol Vesu on Starknet ran into trouble yesterday. The oracle price feed went abnormal, 47 positions were liquidated within two minutes, and $3 million worth of collateral was gone just like that. What’s most alarming is that there was no vulnerability in the protocol itself; the code was running perfectly normally. The problem was with the upstream price data from Pragma.
This incident has kept me thinking about one question: in DeFi, how decentralized is “decentralized,” really? You think you’re on-chain, but in reality you still depend on off-chain oracles and on those few data providers. Once they have a problem, your $ETH collateral is just a lamb waiting to be slaughtered. And this time Vesu also said that if you rush to withdraw, you may directly lose your refund eligibility, forcing you to wait for them to recover the liquidation profits that were stolen by others.
$BTC has held up, $SOL is also rising, and market sentiment looks pretty good, but nobody mentions this kind of underlying risk. Everyone is counting gains, and no one is doing the math on this cost. There’s one detail I still haven’t figured out: do those who got the liquidation rewards count as having snagged something for free, or does the protocol really have a way to claw it back?
What do you think about oracle risk in DeFi? Do you have positions running on-chain?
This incident has kept me thinking about one question: in DeFi, how decentralized is “decentralized,” really? You think you’re on-chain, but in reality you still depend on off-chain oracles and on those few data providers. Once they have a problem, your $ETH collateral is just a lamb waiting to be slaughtered. And this time Vesu also said that if you rush to withdraw, you may directly lose your refund eligibility, forcing you to wait for them to recover the liquidation profits that were stolen by others.
$BTC has held up, $SOL is also rising, and market sentiment looks pretty good, but nobody mentions this kind of underlying risk. Everyone is counting gains, and no one is doing the math on this cost. There’s one detail I still haven’t figured out: do those who got the liquidation rewards count as having snagged something for free, or does the protocol really have a way to claw it back?
What do you think about oracle risk in DeFi? Do you have positions running on-chain?