DeFi Security · Vulnerability class
Liquidation and collateral logic
Collateral is valued or liquidated using inputs that are wrong or manipulable, so healthy positions are seized or bad debt is created.
The concept
Lending protocols turn a price into irreversible actions. Collateral eligibility, liquidation thresholds and circuit breakers decide whether a bad input becomes a loss.
Defensive lessons
- Limit exposure to thin collateral.
- Add circuit breakers on abnormal moves.
- Check derived assets against their base asset.
Stored incidents
2026-09-17 · reported loss $3.5M
Nostra Finance: manipulated NSTR price used as collateralOfficial statement
2026-09-04 · reported loss $1.4M
Pragma and Vesu: a wrong USDT conversion triggered 47 liquidationsOfficial statement