Chainlink oracle ‘malfunction’ stimulates $500k in DeFi liquidations, reignites oracle argument
A Chainlink cost feed’s supposed breakdown led to more than $500,000 in liquidations on May 29, sparking fresh debate over the reliability of oracles in DeFi. The post Chainlink oracle ‘malfunction’ triggers $500k in DeFi liquidations, reignites oracle argument appeared initially on CryptoSlate.
A Chainlink rate feed’s supposed malfunction led to more than $500,000 in liquidations on May 29, sparking fresh dispute over the reliability of oracles in DeFi. According to reports, Chainlink’s price oracle for the deUSD stablecoin erroneously reported its value at $1.03. The incorrect information triggered liquidations for users holding deUSD-denominated financial obligation on Avalanche’s Euler Finance lending protocol. The impact was serious, specifically for those leveraging the asset, which is backed by real-world properties (RWAs) and known for its high-yield potential. deUSD, issued by Elixir, has a total supply of $185 million, with $42.7 million distributing on Avalanche. Due to its yield profile, it has actually been commonly utilized as security, often enabling traders to take advantage of positions up to 10x to go after outsized returns. That very same take advantage of turned devastating when the mispriced data cascaded into forced liquidations.
Market responds to Chainlink’s supposed error The event reignited examination around on-chain oracles. Critics argue these systems are vulnerable to control and mistakes, especially when running in illiquid markets. Omer Goldberg, creator of Chaos Labs, required to X to slam Chainlink, declaring that the oracle delayed an important price upgrade by 25 minutes. He also recommended the price feed may rely too greatly on APIs like CoinGecko, which he stated is unsuitable for stablecoin prices. Goldberg even more claimed that utilizing volume-weighted typical rate (VWAP) in illiquid pools exposes procedures to exploitation. He added: “The point of the oracle is to protect worth and protect users. If the oracle is ‘dumb’ and just spits out pool prices, why even utilize Chainlink at all?” Not all voices lined up with the criticism. Chainlink’s Neighborhood Liaison, Zack Rynes, pressed back against the accusations. He clarified that Chainlink simply reflects aggregated market activity which it is up to individual protocols to analyze or filter the information. Rynes included that a single Curve pool accounted for half of the daily volume that day and momentarily pressed the rate above $1, which Chainlink properly recorded in its VWAP. He wrote: “Chainlink puts the data users want onchain in the format they want, the procedures are accountable for ensuring that data meets their requirements and executes any additional subjective checks or limitations they desire.” Marc Zeller of the Aave Chan Initiative stated the fault lies in procedures treating illiquid or volatile properties like fully grown security. He cautioned against identifying danger faster ways as innovation, saying it ultimately exposes users. Zeller concluded: “Chainlink did their job.” Oluwapelumi Adejumo Oluwapelumi values Bitcoin’s capacity. He imparts insights on a range of subjects like DeFi, hacks, mining and culture, underlining transformative power. Liam ‘Akiba’ Wright Likewise recognized as “Akiba,” Liam Wright is the Editor-in-Chief at CryptoSlate and host of the SlateCast. He believes that decentralized innovation has the prospective to make widespread favorable modification. Binance Labs backed Web3 Start-up with prominent founders Mario Ho and Jackson Wang to Introduce Non-Fungible RWA Procedure Community Daily digest of leading crypto stories and market insights. Never ever lose out. Chainlink brings cross-chain interoperability to Solana, opening $19B in property potential Chainlink praises SEC’s standards, setting phase for crypto integration in institutional finance JPMorgan bridges blockchain and conventional financing in landmark pilot deal PayPal broadens crypto offerings with Solana, Chainlink assistance The fluctuate of NFTs– what’s left? CryptoSlate’s newest report dives deep into the boom-bust trajectory of NFTs: from their euphoric peak and inscription speculation, through the subsequent collapse in activity and value, to the existing search for stability and significance in the consequences. Inside FinchTrade’s Function in Powering CoinsPaid’s EUR875M Crypto Payment Engine Bet20 Introduces Premium Casino Platform with Trusted Licensing, Instant Crypto Withdrawals, and Elite Video gaming Reddio’s Exclusive Token Generation Event (TGE) and Alpha Trading on Binance Wallet– Might 29, 2025 NATIX Introduces Decentralized AI Subnet on Bittensor to Advance Autonomous Driving and Physical AI Disclaimer: Our writers’ viewpoints are solely their own and do not show the viewpoint of CryptoSlate. None of the details you continue reading CryptoSlate should be taken as investment suggestions, nor does CryptoSlate endorse any project that may be discussed or linked to in this article. Purchasing and trading cryptocurrencies ought to be considered a high-risk activity. Please do your own due diligence before taking any action related to content within this post. CryptoSlate takes no obligation needs to you lose cash trading cryptocurrencies.
