Deactivating sDAI/ETH market due to erroneous oracle configuration

On February 22nd the Flagship ETH-Vault submitted a non zero cap proposal to market id EFCC25DDFB12EEC31CC3FD568ED04B4EB568A332600DF308D09DBDA248EDF72E.

On February 26th, before the cap was accepted, Morpho team reached out to us and commented that one of the oracle parameters, namely, conversion sample, is too small, and as a result, the oracle shows lower price for sDAI.

Consequently, we decided not to accept the cap, and we revoked the pending cap with this tx.

Potential consequences

The erroneous configuration assigned a lower price to sDAI (this is visible here), as a result, borrowers who were not aware of the oracle price, would have been liquidated prematurely.

Lenders and vault depositor funds were not at risk.

Lesson learned

The initial oracle configuration was done after a consultation with Morpho’s integration team, however the actual deployment was not fully reviewed until a later stage. In the future we will double check with the integration team before submitting the pending market cap.

In the future, we will also use Block Analitica’s dashboard to sanity check the deployed oracle prices. Indeed, the dashboard clearly shows a different value for sDAI in the erroneous sDAI/ETH market w.r.t the correct oracle configuration in the sDAI/USDT market.