The decentralized finance (DeFi) lending protocol Aave experienced a significant technical issue on March 10, 2026, when a glitch in its risk oracle resulted in approximately $27 million in liquidations.
While the protocol itself remained unscathed, the event has renewed scrutiny on oracle reliability in DeFi amid ongoing governance tensions.
Meanwhile, the AAVE token shows resilience, but other market conditions could see bears eye recent lows.
Aave suffers $27 million liquidations event
The losses occurred after Aave’s Collateral Asset Price Oracle (CAPO) suffered a configuration error.
CAPO is an external risk management tool, and an inconsistency between a stale snapshot ratio and its associated timestamp triggered a mismatch that saw the oracle undervalue wstETH by 2.85%.
This pushed select borrowing positions below safety thresholds and triggered unfair liquidations.
Risk firm Chaos Labs, which supports Aave’s oracle operations, confirmed the glitch.
The platform stated in a press release that the issue originated from unsynchronized parameters in a smart contract, primarily affecting wstETH.
The event resulted in a 345 ETH loss for borrowers.
However, no bad debt was incurred by the protocol.
Aave Labs founder and CEO Stani Kulechov also noted via X that “there was no impact to the Aave Protocol.”
He added: “A technical misconfiguration resulted in the liquidation of positions that were already close to their liquidation thresholds.”
Still, this marks a rare oracle-driven liquidation cascade for Aave, which has historically processed $4.65 billion in liquidations without systemic failures.
According to a post-mortem analysis by Chaos Labs, a fix has been implemented.
Chaos founder Omer Goldberg said “all affected users will be fully reimbursed.”
Aave price analysis
The AAVE token’s price is trading around $109.30, flat over the past 24 hours.
It declined from its intraday high of $114, largely aligning with the slight dip for Bitcoin and Ethereum, even as BTC looked to hold near $70,000.
The broader risk asset market pressure means AAVE is also struggling to reclaim upward momentum, and exacerbating this is the recent governance issues that saw Aave Chan Initiative (ACI) exit from the Aave DAO.
ACI announced the move on March 3, 2026, after clashes over voting dynamics and funding.
ACI founder Marc Zeller cited governance breakdowns, planning a four-month wind-down, and infrastructure handover.
The price of AAVE dropped sharply amid these developments, pulling back from highs of $125 to around $108.
Bulls’ attempts to rebound have faded around $114 in the past week.
Outlook remains cautious in the short term, with volatility tied to macro sentiment and the Iran war likely to catalyze fresh declines.
Technicals show primary support at $104 and resistance at $114. Failure to hold above $100 could allow sellers to target $75 or lower.
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