DeFi lending protocol Moonwell hit with $1.8 million bad debt after oracle misconfiguration

The DeFi lending protocol Moonwell experienced approximately $1.78 million in bad debt following an incident on its Base market caused by an oracle misconfiguration. The error occurred after executing governance proposal MIP-X43, which enabled Chainlink OEV wrapper contracts. One configuration incorrectly derived the USD value of Coinbase Wrapped ETH (cbETH) using only the raw cbETH/ETH exchange rate, reporting it around $1.12 instead of its actual market value near $2,200. This severe undervaluation allowed liquidation bots to repay minimal debt and seize large collateral amounts, resulting in 1,096.317 cbETH being liquidated. Moonwell halted further activity by setting supply and borrow caps to zero for the affected market while awaiting a governance vote to formally patch the error. The incident also drew scrutiny because commits related to the configuration change showed co-authorship by the AI model Claude Opus 4.6, though experts largely attributed the failure to a low-level configuration mistake rather than a novel smart contract vulnerability. This is the latest in several oracle-related disruptions for Moonwell.

(Source：The Block)