Aave CAPO Oracle $27.78M Liquidation — Dev.to

When the Guard Dog Bites: The Aave CAPO Oracle Incident That Liquidated $27.78M A deep dive into how Aave's automated anti-manipulation oracle became the source of a $27.78M liquidation cascade, and what Web3 developers should learn from it. The Incident in Brief On March 10, 2026, Aave's CAPO Oracle — an automated system designed to prevent oracle manipulation — pushed a faulty snapshotRatio update for wstETH. The oracle priced wstETH at ~1.19 ETH instead of the market rate of ~1.228849 ETH. A 2.85% discrepancy. That was enough. 34 E-Mode positions were liquidated. 10,938 wstETH wiped out. Total value: approximately $27.78M. No hacker. No exploit. The safety system itself fired on friendly forces. Understanding CAPO Oracle ┌──────────────────────────────┐ │ Chaos Labs Edge Risk Engine │ ← Off-chain computation └────────────┬─────────────────┘ │ Submit update ▼ ┌──────────────────────────────┐ │ AgentHub (BGD Labs) │ ← On-chain execution layer └────────────┬─────────────────┘ │ Execute