Around late May 2025, more than $500,000 was wiped out from users of Elixir Network’s deUSD stablecoin on Avalanche when an apparent Chainlink price oracle error misreported deUSD’s value and triggered mass liquidations on the Euler lending market deployed on Avalanche. Chainlink’s deUSD feed briefly pushed a price around $1.03 (reported as $1.0283) after a relatively small trade on Curve’s thin deUSD liquidity on Ethereum, and that price was then relayed cross‑chain to Avalanche, where positions using deUSD as collateral were running at very high leverage (loan‑to‑value ratios near 92.5%). Within roughly three minutes and two Avalanche blocks, approximately $500k–$530k in leveraged positions were liquidated on Euler. The incident highlights structural risks in DeFi setups where synthetic, yield‑bearing stablecoins like deUSD are heavily leveraged and priced via external oracles that aggregate data from fragmented and sometimes illiquid markets. deUSD, issued by the Elixir Network and backed by real‑world assets, had a circulating supply in the hundreds of millions, with tens of millions bridged to Avalanche and widely used as collateral due to its high yield. After the mispricing, entities involved with the Euler market on Avalanche (including Re7 and K3) responded by hard‑coding deUSD’s value to $1 as a temporary mitigation, while risk‑management firm Chaos Labs, whose co‑founder Omer Goldberg publicized the “$500K gone in 180 seconds” liquidation on X, began promoting more “context‑aware” oracle solutions designed to account for low liquidity, cross‑chain fragmentation, and leverage conditions when computing price feeds. The episode has reignited industry debate over the reliability of Chainlink and other DeFi oracles, and the need for smarter safeguards—such as price caps or more conservative designs—when integrating leveraged stablecoins into lending markets.

AI-generated background, compiled from web sources — not editorial content.

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