AlphaLend Winding Down After Oracle Error Creates Bad Debt

AlphaFi, a Sui-based lending protocol, is winding down its AlphaLend service after an oracle error created bad debt. The Sui Foundation has stepped in to support the solvency of the protocol.

The misconfiguration affected loans backed by ALPHA, causing them to become substantially undercollateralized. However, the bad debt has now been fully covered, and all user funds are safe, according to AlphaFi.

AlphaLend's documentation relies on oracle prices to value collateral and determine liquidations. The Sui Foundation's security team identified the misconfiguration and helped resolve it.

The protocol is currently in maintenance mode, with new deposits and loans disabled while withdrawals remain open. Existing borrowers are being told to unwind their positions and withdraw their assets. Slush Users have been advised to exit four strategies provided by AlphaFi.