Starknet lending protocol Vesu says an incorrect upstream price feed from oracle provider Pragma triggered a short burst of abnormal liquidations across several of its liquidity pools, leading to about $3 million in collateral being removed.
According to Vesu, the incident took place between 04:08 and 04:10 UTC on Sept. 4. During that two-minute window, 47 borrowing positions were made to appear eligible for liquidation before the feed corrected itself. The protocol said its smart contracts functioned as intended and that the event was caused by bad pricing data rather than a vulnerability in Vesu itself.
What happened during the incident
Vesu said the problem originated with an upstream Pragma price source that delivered incorrect market data. Because lending protocols rely on those inputs to assess collateral values and loan health, the wrong prices briefly pushed a number of borrowers into apparent liquidation territory.
Automated liquidators then acted on those signals, removing roughly $3 million in collateral from 47 positions spread across multiple pools. The feed returned to normal within about two minutes, but liquidations executed during that period were already on-chain.
The protocol has not disclosed which assets were involved, how far prices deviated from normal levels, the debt tied to the affected accounts, or how much collateral liquidators ultimately kept. Vesu said a technical report is expected to provide additional detail on the impacted markets and related transactions.
Vesu and Pragma response
After the incident, Pragma deployed a fix, according to Vesu. Curators overseeing the affected liquidity pools also paused those markets as a precaution while reviews continue.
Vesu said reopening those pools will depend on the curators, but it did not identify which curators took action or give a timeline for restoring activity. The protocol again stressed that the liquidations resulted from faulty external inputs, not from incorrect contract execution.
Recovery remains uncertain
Vesu said it is coordinating with Pragma, StarkWare, the Starknet Foundation, and curators of the affected pools in an effort to recover funds tied to the abnormal liquidations. At this stage, however, the path to restitution is still unresolved.
The protocol has not said how much of the estimated $3 million can realistically be recovered, whether liquidators are expected to return any assets voluntarily, or whether compensation might instead come from protocol-controlled funds or another arrangement. Vesu indicated that restoration could depend on recovered collateral, voluntary returns, or a separate agreed mechanism.
What affected users have been told
Borrowers impacted during the two-minute window were asked to submit support tickets through Vesu’s Discord so their cases can be reviewed. Users with deposits in Vesu’s Earn product were also advised to keep their positions open for now, as closing Earn positions early could affect eligibility for any eventual refund process.
For now, the next confirmed steps are limited: paused pools remain under curator review, Pragma’s fix has been deployed, and Vesu says more detail should come in a technical report. Key questions, including the final scope of losses and the exact recovery method, have not yet been answered.
Source: crypto.news