DeFi lender Nostra pauses borrowing after price feed error

Nostra, a lending protocol on Starknet, has paused borrowing for two liquid staking tokens after identifying a “critical issue” with its price feeds, the decentralized finance (DeFi) protocol said. 

On March 24, errors in Nostra’s price feed inflated the reported prices of xSTRK and sSTRK — two liquid staking derivatives of Starknet’s native STRK token — to approximately three times the tokens’ actual value, Nostra said in a post on the X platform.

According to Nostra, “[s]uch an inflated price feed could have caused unnecessary liquidations of otherwise safe positions, resulting in users with healthy positions getting liquidated.” 

In response, the DeFi protocol has disabled any further borrowing against xSTRK and sSTRK collateral deposits, Nostra said. 

Nostra has also recommended that users with existing xSTRK and sSTRK deposits withdraw the collateral immediately. 

“Since we don’t have a secondary (fallback) oracle to support these assets, as none are available, we are unable to fully prevent similar events from occurring in the future,” Nostra added.

“Our priority has always been and continues to be to keep existing user funds safe and with no fallback oracle, the risks outweigh the benefits,” it said. 

Related: Starknet to settle on Bitcoin and Ethereum to unify the chains

Starknet DeFi protocol

Starknet is a layer-2 scaling chain of Ethereum secured using zero-knowledge (ZK) proofs. It launched its mainnet in late 2021, according to Messari.

It has a total value locked (TVL) of approximately $575 million, according to data from L2Beat. 

Lending protocol Nostra is among the larger DeFi projects operating on the chain. It has a TVL of approximately $55 million, according to its website. 

On Nostra, users post collateral in one token to borrow in another token. The DeFi protocol’s most popular collateral tokens are Ether, STRK, and stablecoins USDC (USDC) and Tether (USDT). 

Starknet designed STRK to be staked in exchange for a portion of the network’s fee revenues, according to its documentation.

xSTRK and sSTRK are liquid staking tokens issued by independent DeFi protocols Endur and Nimbura, respectively. 

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