Crypto Trader's $500k Loss Sparks Oracle Concerns 💸
A crypto trader faced a massive loss of over $500,000 due to a sudden spike in deUSD prices, leading to liquidation on the Euler platform. This incident was caused by significant trades in the illiquid deUSD/USDT Curve pool, sending deUSD's price to $1.03. Chainlink’s pricing system, which employs VWAP, came under scrutiny as experts debated its effectiveness in volatile markets. Critics argue that the system can be manipulated, while supporters claim it functioned correctly amidst market uncertainty. Suggestions have been made for a more resilient pricing strategy.
FAQ
❓ What caused the trader's loss?
The loss was due to deUSD price spikes in an illiquid market, leading to liquidation on Euler.
❓ Why is Chainlink's VWAP system criticized?
Chainlink's VWAP system is seen as vulnerable to manipulation in low-liquidity markets.
❓ What are the proposed solutions?
Experts suggest a more stable pricing algorithm or capping prices to prevent such issues.