Svmuu News: According to a post-incident report released by Chaos Labs, an Aave risk management provider, a temporary oracle failure occurred in the Aave protocol on March 10, resulting in the liquidation of approximately $26 million worth of wstETH positions.The incident affected the AaveEthereumCore, and Prime markets, impacting a total of 34 accounts and resulting in the liquidation of approximately 10,938 wstETH. The failure stemmed from a misconfiguration in CAPO, Aave’s asset price oracle.A mismatch between the snapshot ratio and snapshot timestamp parameters in the system caused the oracle to report an exchange rate of approximately 1.1939, while the actual market rate was approximately 1.228. This resulted in an effective rate deviation of 2.85%, triggering automatic liquidations in the E-Mode market. Chaos Labs stated that off-chain processes determined the snapshot ratio should be updated to approximately 1.2282, but on-chain rules limit this parameter to a maximum increase of 3% every 3 days, preventing a one-time update and resulting in the parameter mismatch. In this incident, third-party liquidators profited by approximately 499 ETH from the forced liquidation. The protocol itself did not incur any bad debt, and the losses were borne by the borrowers.Chaos Labs has temporarily lowered the wstETH borrowing limit and manually aligned the parameters. It is currently advancing a compensation plan, having recovered 141.5 ETH for payouts, and will supplement this with up to 345 ETH from the Aave DAO treasury if necessary.Chaos Labs stated that the incident was not a design flaw in CAPO, but rather a misalignment in on-chain configurations resulting from differing update constraints.