What happened

Moonwell, a lending protocol on the Moonbeam DeFi ecosystem, suffered a loss of roughly USD 1.78–1.8 million after a misconfigured "price oracle" (the system that tells the smart contract how much an asset is worth ) wrongly valued Coinbase Wrapped ETH (cbETH) at USD 1.12 instead of its true market value of USD 2,200. 

The discrepancy triggered automated "liquidators" to instantly seize collateral from honest borrowers, resulting in USD 1.78 million in bad debt for the protocol and significant financial losses for users whose positions were unfairly closed. 

Why it happened

The root cause was a fundamental mathematical error in a GitHub pull request co-authored by Claude Opus 4.6. The AI-assisted code failed to multiply the "exchange rate" of the token by the "USD price feed," essentially providing a relative ratio instead of a dollar value.

The incident highlights an over-reliance on "vibe coding", with the developer using Generative AI to write high-stakes financial logic without performing rigorous, end-to-end integration testing that would have flagged the USD 1.12 price as an anomaly.

In addition, while the commits were transparently labeled as co-authored by an AI, the internal peer-review process failed to catch the "hallucinated" logic before it was pushed to a live environment.