Aave v3 CAPO misconfiguration caused erroneous wstETH liquidations

What happened

A mismatch between CAPO's rate-limited snapshot ratio and its snapshot timestamp artificially reduced the wstETH/stETH exchange rate used by Aave v3 Ethereum Core and Prime, liquidating otherwise healthy E-Mode positions.

What changed

The erroneous update temporarily changed the oracle value used for liquidation and led risk stewards to reduce the affected wstETH borrow caps to 1. The snapshot parameters were then manually realigned and the oracle returned to its prior value.

What did not change

The postmortem reports no protocol bad debt and no exploit of Aave v3 core contracts. Restoration of the oracle did not itself complete user compensation, provider accountability, or deployment of all proposed prevention controls.

Confirmed

• The incident occurred on March 10, 2026 in Aave v3 Ethereum Core and Prime.
• The effective wstETH exchange rate used by the protocol fell approximately 2.85%.
• Approximately 10,938 wstETH was liquidated across 34 accounts, representing about $26 million of liquidation volume.
• The postmortem reports no bad debt to the protocol.
• The affected wstETH borrow caps were reduced to 1 during containment.
• Risk Steward intervention realigned the snapshot ratio and timestamp and restored the oracle value.

Still open

• Final per-user reimbursement and reconciliation were not complete in the postmortem.
• The ultimate division of financial responsibility among the DAO and service providers remained unresolved.
• Several proposed off-chain validation and on-chain guardrails had not yet been demonstrated as deployed.
• The final amount recovered from liquidation-linked activity remained open.

What it means for an advisor

• Review any approved Aave v3 strategy using wstETH E-Mode for exposure to CAPO configuration and delegated Risk Steward operations.
• The Aave v3 memo should record oracle-operator configuration as a material operational dependency even when core contracts are not exploited and no bad debt results.
• Do not treat restored pricing or a reimbursement proposal as evidence that recurrence controls are complete.