Pendle Oracle Move Triggers $36M in Morpho Liquidations
A trade in a thinly traded Pendle yield market set off $36.1 million in liquidations on Morpho early Tuesday, unwinding leveraged positions in roughly 14 minutes while lenders were left whole, according to The Defiant.
The Defiant reported that a wallet bought yield tokens in a $9 million Pendle pool, pushing the principal token price down 2.8% and triggering liquidations on a Morpho market that carried $52 million in borrows. Pendle and vault curator Steakhouse Financial both said the price feed functioned as designed.
The Defiant described the episode as a familiar failure mode for looped yield strategies, in which a lending market grows far larger than the pool used to price its collateral. The Pendle reUSD pool maturing Dec. 10 held $8.97 million of liquidity according to Pendle’s API, while the Morpho market accepting its principal tokens as collateral held $67.5 million in collateral against $52.2 million in borrows at a 91.5% liquidation threshold. Borrowers who had looped positions to health factors of 1.03 had less than a 3% buffer against a price move, per the outlet.
The Defiant cited Morpho’s API showing 33 liquidation events between 04:37:47 and 04:51:23 UTC across two affected markets, repaying $36.14 million in debt and seizing 38.6 million principal tokens. The USDC market accounted for $35.19 million of that total and the USDT market for $956,000. Realized bad debt across both markets was zero. The three largest liquidated borrowers lost positions of $13.01 million, $11.01 million and $6.83 million, The Defiant reported.
PENDLE fell 4.3% over 24 hours to $1.74 and MORPHO dropped 5% to $2.52 as of 16:01 UTC, per CoinGecko data cited by the outlet, against a 3.2% decline in total crypto market capitalization. Pendle’s daily fees rose to $91,863 on Tuesday from $54,640 on Monday, according to DefiLlama data cited by The Defiant. The protocol’s total value locked stood at $1.18 billion, down 88.5% from $10.3 billion a year earlier.
Based on reporting by thedefiant.io.
