Historical bad-debt events

Morpho V1 (Morpho Blue + MetaMorpho)'s assessment for RD-F-067 — scored yellow on the v1.7.0 rubric. The evidence below is the curator's reasoning for this score.

Evidence summary #

One documented bad-debt event: PAXG/USDC market oracle misconfiguration, Oct 2024, ~$230k USDC loss borne by market lenders. Market isolation prevented protocol-wide socialization. No other documented bad-debt events at protocol level. Rekt DB shows 0 incidents per data cache.

Detail #

PAXG/USDC oracle exploit Oct 13, 2024: SCALE_FACTOR misconfiguration inflated PAXG valuation by 1e12 (12-decimal error). Attacker supplied $350 PAXG to borrow $230k USDC. Loss bore by PAXG/USDC market lenders per market isolation design. Morpho Labs stated this was curator misconfiguration, not a protocol bug. LeadBlock published retrospective on Morpho governance forum. Risk curator recovered some funds and worked to repay lenders per post-mortem. Data cache rekt.incidents = [] (the $230k event is below Rekt's typical coverage threshold). Template: green = 0 bad debt events; yellow = 1 bad debt event with partial recovery. Yellow applies.

Sources #

Partner feed
Rekt leaderboardData cache rekt.incidents = [] (no protocol-level events recorded)retrieved 2026-04-27
URL
QuillAudits PAXG/USDC exploit analysisPAXG/USDC exploit: attacker borrowed $230k USDC with $350 PAXG due to oracle SCALE_FACTOR 12-decimal errorretrieved 2026-04-27
Governance
PAXG/USDC retrospectiveLeadBlock retrospective on PAXG/USDC market oracle configuration — Morpho governance forumretrieved 2026-04-27

Methodology #

Count and sum (USD) the number of documented bad-debt events where the protocol socialized losses across depositors.

See the full factor methodology and distribution across all protocols →

rubric_version v1.7.0 protocol morpho-v1 factor RD-F-067 score yellow collected_at 2026-04-30 21:19:13