Chaos Labs: Aave's approximately $27 million liquidation event was caused by a configuration problem with the CAPO risk oracle.

On March 11, according to an analysis report released by Chaos Labs, the recent liquidation event of approximately 27 million USD on Aave was caused by a configuration issue with the CAPO risk oracle.

The root cause lies in inconsistent update constraints at the smart contract level: the snapshotRatio parameter is restricted by an on-chain constraint allowing only a 3% increase every 3 days, so it could not be updated directly from about 1.1572 to the target value of about 1.2282, and could only increase to about 1.1919; meanwhile, the snapshotTimestamp was successfully updated to a timestamp from 7 days ago. This misalignment between the ratio and the timestamp caused the CAPO-calculated exchange rate cap (about 1.1939) to be approximately 2.85% lower than the actual market exchange rate, triggering the liquidation of about 10,938 wstETH. No bad debt was generated in the protocol during the event.

Chaos Labs and BGD Labs immediately lowered the borrowing cap of wstETH for the affected instance to 1 and manually aligned the parameters to restore the exchange rate through Risk Steward. 141.5 ETH has been reclaimed via BuilderNet to compensate affected users, with the remaining amount covered by the Aave treasury. The amount expected to be temporarily compensated by the DAO does not exceed 345 ETH.