The alleged malfunction of a Chainlink Price Feed led to more than $ 500,000 in liquidations on 29 May, which caused a new debate about the reliability of oracles in Defi.
According to reportChainlink’s price oracle for the Deusd Stablecoin reported its value inaccurately at $ 1.03. The incorrect data caused liquidations for users with dusd-mixed debts on Avalanche’s Euler Finance Lending Protocol.
The impact was serious, especially for those who use it actively, supported by Real-World assets (RWAS) and known for its high-interest potential.
DEUSD, published by Elixir, has a total stock of $ 185 million, with $ 42.7 million circulating on Avalanche. Due to the yield profile, it is used on a large scale as collateral, so that traders can often use positions up to 10 times to chase large returns.
However, the same lever became catastrophic when the incorrect data coincided in forced liquidations.
The industry responds to Chainlink’s alleged misstep
The incident revived the investigation around the Oracles chain. Critics claim that these systems are vulnerable to manipulation and errors, especially when working in illiquid markets.
Omer Goldberg, founder of Chaos Labs, went to X to criticize Chainlink, assertion That the Oracle has delayed an essential price update with 25 minutes.
He also suggested that the price food could be too hard on APIs such as Coingecko, of which he said it is inappropriate for Stablecoin’s prices.
Goldberg also claimed that the use of Volume Woogte Average Price (VWAP) in illiquid Polish protocols exposes to exploitation. He added:
“The point of the oracle is to secure value and protect users. If the oracle is ‘stupid’ and simply spits out the pool prices, why even use chain link at all?”
However, not all votes are in accordance with the criticism.
Chainlink’s community configuration, Zack Rynes, pushed back against the allegations. He clarified that Chainlink only reflects aggregated market activity and that it is up to individual protocols to interpret or filter the data.
Rynes added that a single Curve pool that day was good for half of the daily volume and the price temporarily pushed above $ 1, which was accurately recorded in its VWAP. He written:
“Chainlink places the data users who want Onchain in the format they want, the protocols are responsible to ensure that data meets their requirements and implement any additional subjective checks or limits they want.”
In the meantime, Marc Zeller of the Aave Chan initiative said the error in protocols that treat fleeting or illiquid assets, such as adult collateral. He warned about labeling risk -fast couplings such as innovation and said it ultimately exposes users.
Zellers Closed:
“Chainlink did their job.”