According to The Block, a trader lost over $500000 due to abnormal VWAP mechanism of Chainlink oracle. The incident originated from the MEV robot Jared FromSubway on Ethereum conducting a large transaction of $210000 in Curve's deUSD/USDT pool, causing the deUSD price to briefly soar to $1.03 in the low liquidity market. The price fluctuation is transmitted to the Avalanche network through the Chainlink oracle, triggering the liquidation of users' positions on the Euler lending platform.
ChainLink God, a supporter of ChainLink, explained that the oracle adopts a market wide VWAP pricing mechanism, and deUSD has been marked as a "high-risk asset". Chaos Labs founder Omer Goldberg pointed out that there are design flaws in using VWAP in pools with insufficient liquidity, and suggested implementing price caps or outlier resistant algorithms for stablecoins. Data shows that out of a total supply of $185 million in deUSD, $42.7 million is circulating on the Avalanche chain.