Pendle says reUSD liquidations were triggered by 3% PT price drop, not oracle error

Pendle said the large-scale liquidations in Morpho’s PT-reUSD/USDC market were not caused by an oracle configuration error. PT-reUSD, a token representing the right to redeem principal at maturity, was liquidated after the PT price briefly fell 3%, with that market price reflected in the oracle benchmark, according to Pendle. The protocol explained that this reduced the collateral value of positions that repeatedly borrowed USDC on Morpho to increase PT exposure. Some positions with health factors below 1.03, leaving less than 3% room to withstand a price drop, were liquidated in the move. Pendle added that the oracle uses the lower of PT’s 15-minute average market price and a benchmark price reflecting a 6% annual discount rate through maturity. The oracle functioned as designed, no bad debt emerged during the liquidation process, and Morpho’s Pendle ecosystem vaults were unaffected, Pendle said.