Anchor disclosed an abnormal liquidation situation: over 46.24 million USD in assets were liquidated, affecting 239 users

Source: Anchor Twitter

Compiled by: Hu Tao, Chain Catcher

Today, the Terra lending protocol Anchor Protocol released an investigation report detailing the process and reasons behind the abnormal liquidations that occurred yesterday.

According to the report, at 4:43 AM Beijing time on December 10, the bLUNA price reported by the Anchor oracle pricing system was $58.44, significantly lower than the LUNA price reported by external exchanges, where Binance's LUNA/USDT pair was quoted at approximately $66.10.

Subsequently, the Anchor pricing system experienced two additional price discrepancies about 30 minutes after the initial event. These events triggered a total of three liquidations. However, most of the affected liquidations occurred after the initial price discrepancy.

Statistics show that due to the inaccurate prices reported by the Anchor oracle pricing mechanism, 239 users had their open positions liquidated erroneously because their maximum LTV fell below 60%. A total of approximately 690,727.489 bLUNA was liquidated, with a total discounted value of about $37.249 million.

In addition, many users' bETH positions were also affected by the oracle pricing incident, but these users' bETH liquidations occurred because they still held bLUNA positions, thus bETH was implicated. Statistics indicate that a total of 242 users had 102.74 bETH liquidated, with a total discounted value calculated at the trigger price of $359,000.

Note: Due to the liquidation impact, the price of bETH on Terraswap dropped to a low of $689

Anchor is currently investigating the exact source of the issue and has already implemented a patch fix for the Anchor oracle pricing system to reduce any further discrepancies. The new price feed structure obtains prices from Chainlink's oracle network + Anchor Hub contract, which accurately tracks the LUNA/bLUNA ratio, as all bLUNA minting occurs through it.

Regarding the affected users, Anchor has also released detailed remedial measures, planning to compensate for any liquidation premiums and the price discrepancies caused by erroneous prices, bringing each liquidated position back to neutral, with compensation amount = total collateral value - proceeds from the sale of collateral.

Anchor expects the total compensation amount may approach $9 million. Meanwhile, Anchor encourages the community to create governance proposals to compensate these users through the distribution of ANC in the community pool.