dave ⟁⟁⟁

Isolated lending markets are most likely the best approach to onchain money markets. Morpho got this part right tbh. What they got wrong is how they manage oracles. But it’s not just Morpho, DeFi’s greatest dependency is in oracles. 100s of millions poured into infrastructure over the years, yet oracles remain under funded and over looked.

$50M unbacked USR minted. Price nuked. The underlying Morpho Market has USR hardcoded at $1. LPs wrecked. We have ZERO exposure to anything Resolv related. Not because we managed to pull out in time, but because we never allocated to anything USR related to begin with.

Earlier today, a user attempted to buy AAVE using $50M USDT through the Aave interface. Given the unusually large size of the single order, the Aave interface, like most trading interfaces, warned the user about extraordinary slippage and required confirmation via a checkbox. The user confirmed the warning on their mobile device and proceeded with the swap, accepting the high slippage, which ultimately resulted in receiving only 324 AAVE in return. The transaction could not be moved forward without the user explicitly accepting the risk through the confirmation checkbox. The CoW Swap routers functioned as intended, and the integration followed standard industry practices. However, while the user was able to proceed with the swap, the final outcome was clearly far from optimal. Events like this do occur in DeFi, but the scale of this transaction was significantly larger than what is typically seen in the space. We sympathize with the user and will try to make a contact with the user and we will return $600K in fees collected from the transaction. The key takeaway is that while DeFi should remain open and permissionless, allowing users to perform transactions freely, there are additional guardrails the industry can build to better protect users. Our team will be investigating ways to improve these safeguards going forward.