SUI Network announced an organized shutdown of AlphaFi after a misconfigured oracle for ALPHA led to undercollateralized loans and bad debt on AlphaLend. Users may repay debts and withdraw funds during the maintenance phase. SUI is trading at $1.17 with a $4.81 billion market cap and $1.78 billion in daily volume, having gained over 40% in the past week. The Sui Security Team identified the issue, and the Sui Foundation assisted with resolution. The incident underscores oracle risks in decentralized finance.
SUI Network has received notice of a well-organized shutdown of AlphaFi due to a misconfigured oracle for ALPHA that caused undercollateralized loans and bad debt on AlphaLend. Users can pay off their debts and withdraw their funds.
As stated by Sui, the issue occurred due to a misconfiguration regarding the ALPHA price oracle of AlphaFi. This resulted in undercollateralization of borrowings against ALPHA tokens on AlphaLend.
Sui said, “Following the Sui Security Team’s identification of and assistance with the resolution of @AlphaFiSUI ‘s misconfiguration of their ALPHA oracle and subsequent creation of bad debt, AlphaFi is winding down operation of their protocol.” The Sui Foundation assisted in ensuring AlphaFi remains solvent.
AlphaFi has entered maintenance mode, preventing new loans or deposits. Existing users may still repay loans and withdraw funds.
Users who accessed AlphaFi through Slush are also affected. Withdrawals remain available, though some delays have been eliminated.
As mentioned by analyst Crypto Patel, SUI broke out of its multi-month descending structure to retake its key trendline. Patel identified $1.42 as a crucial level for the long-term trend.
Moving averages confirm accelerated recovery, with the 20-period EMA above the 50-period EMA. The RSI above 70 indicates strong buying pressure but also overbought conditions.
SUI Community noted daily trading volume reached $1.82 billion, a 30.5% increase. AlphaLend had surpassed $100 million in total supplies before the shutdown.
The AlphaFi shutdown demonstrates oracle risks in DeFi lending, though no wallet drain was reported. The Sui Foundation‘s steps ensured the debt does not become a user loss, according to Sui.
