Oracle Pyth Goes Haywire on Solana with Bad Prices
The Pyth Network malfunctioned on Sep. 20 as the data provider reported a Bitcoin price of $5,402 on a day when other sources like CoinGecko didn’t report a BTC price below $40K. That wasn’t the only snafu. Pyth’s price feed for the stock of movie theater chain, AMC, showed a spike to $772 on Sep.…
By: Owen Fernau •DeFi News
The Pyth Network malfunctioned on Sep. 20 as the data provider reported a Bitcoin price of $5,402 on a day when other sources like CoinGecko didn’t report a BTC price below $40K.
That wasn’t the only snafu. Pyth’s price feed for the stock of movie theater chain, AMC, showed a spike to $772 on Sep. 15 and 17, a yawning disparity with conventional data providers like Yahoo Finance, which didn’t show AMC’s price rising higher than $50 on those days.
Pyth’s DOGE feed also showed a price above $0.88 for 11 hours on Sep. 15, a day when CoinGecko never reported DOGE’s price above $0.25.
Pyth, which is a so-called oracle that bridges traditional finance and blockchain-based apps, is breaking one of the cardinal rules of the markets — don’t release bad pricing data.
Unlike CoinGecko, developers use Pyth’s data to price real-time smart contracts. It receives price data from the likes of crypto exchange FTX and Virtu Financial, a traditional market maker, and then uses its own software to crank out instant price feeds for traders and developers. So the price feed can trigger actions in DeFi apps, namely liquidations, where users lose their posted collateral. No surprise, traders were freaking out as Pyth went haywire.
“Stellar work — your faulty oracle feed liquidated my position on @mangomarkets,” wrote Trade Daddy on Twitter. “But neither of you will take fiscal responsibility now, will you?”
The fiasco hits less than a month after Pyth launched on Solona’s mainnet with the explicit aim of bringing reliable data on-chain in milliseconds. Their offerings include both blockchain native assets like BTC, but also stocks like AMC.
A representative from Pyth declined to comment. On Wednesday, the outfit published an analysis acknowledging the price problems and explaining its causes.
“Several Solana programs relying on Pyth prices were impacted by this incident,” the report said. “The impact was exacerbated due to some program relying on the aggregate price feed without using the confidence.”
Translation: Pyth’s program for projecting the certainty of prices failed.
Pyth said its developers are making changes to prevent incorrect price feeds in the future. These include a testing protocol so companies providing data to Pyth can see how their data will be rendered before sending it as a final product.