A trader on the DeFi platform Euler lost over $500,000 following a three-minute spike in deUSD on the Avalanche network to $1.028. The abrupt change was triggered by a $210,000 MEV bot transaction in the deUSD/USDT pool on the Curve platform in Ethereum.
$500K gone in 180 seconds.
Chainlink just proved oracles are one of the weakest links in DeFi.
Here’s what happened: pic.twitter.com/IgJvwhBKqU
— Omer Goldberg (@omeragoldberg) May 29, 2025
The incident arose from the operation of Chainlink oracles’ VWAP mechanism. Omer Goldberg, founder of Chaos Labs, described such services as “the weakest link in DeFi.”
“When markets are fragmented, leverage is dynamic, and liquidity changes in real-time [oracle risks persist]. We are still in the development of such services in v0. The next step is not just more data, but intelligent data streams. If your oracle does not see the whole picture, it is not a source of truth,” he explained.
In this instance, the situation was exacerbated by the low TVL of deUSD, which stands at $42.7 million.
“Using VWAP on illiquid pools is a vulnerable construction. You weigh volume by highly liquid pools. Of course, one ‘large’ transaction affects the price,” Goldberg explained.
According to the founder of Chaos Labs, oracles can be improved either through stablecoin price constraints or by “more resilient” algorithms.
As reported, Chainlink connected the JPMorgan blockchain and the Ondo Chain testnet.