Pendle Oracle Incident Highlights Risk of Manipulation
A recent event involving Pendle's oracle system has raised questions about its design and potential vulnerabilities. The incident occurred in the PT-reUSD/USDC market, where a brief price move on the PT-reUSD asset triggered $36.1 million in liquidations.
According to Steakhouse Finance, the lending platform that deployed the market using Pendle's PT-reUSD asset as collateral, the oracle was set up correctly and functioned exactly as intended. However, the sharp 2.6% price move caused a number of large, highly leveraged positions to liquidate.
Herd co-founder Andrew Hong offered a different characterization of the event, describing it as an 'oracle manipulation' where someone engineered the price movement to trigger liquidations and capture a significant portion of the collateral.
Both teams agree that lender positions were protected, and no bad debt resulted from the event. However, the incident highlights the importance of risk management and the potential for exploitation in highly leveraged positions.