Aave founder says liquidation error was caused by risk management tool

Following a large-scale liquidation event on the crypto lending protocol Aave, which saw $27 million in positions closed in a single day, the project has identified the cause as a configuration error in its risk management tool (CAPO). Aave founder Stani Kulechov explained on X that CAPO is an external risk management tool used by the Aave protocol. He stated that a technical configuration error led to the liquidation of some positions that were near their liquidation thresholds. During this process, a total of 345 ETH was paid to liquidators in the form of excess liquidation profits, and no bad debt was incurred. Kulechov added that the configuration issue has now been resolved and that discussions are underway to compensate affected users with the fees generated from the liquidations.