Collateral Mispricing Attack involves manipulating the reported value of collateral assets within a lending protocol to obtain an undercollateralized loan or avoid liquidation. Attackers exploit oracle vulnerabilities or market inefficiencies to temporarily inflate the price of their collateral. This malicious act can result in significant losses for the lending platform and its liquidity providers.
Context
News concerning collateral mispricing attacks highlights the critical reliance of DeFi lending platforms on accurate and tamper-proof price oracles. The ongoing security discussion focuses on strengthening oracle networks, diversifying price sources, and implementing circuit breakers to prevent rapid, manipulated price feeds. These attacks underscore the need for resilient price discovery mechanisms in decentralized finance.
A Chainlink oracle glitch mispriced `wrstETH` collateral, allowing an attacker to execute a systemic under-collateralized borrowing exploit, draining $1.1M.
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