DeFi lending protocol Moonwell has incurred approximately $1.78 million in bad debt following an oracle configuration error. The issue arose after Moonwell enabled Chainlink’s OEV wrapper contract through governance proposal MIP-X43, but incorrectly set the price oracle for cbETH, valuing it at just $1. This misconfiguration allowed on-chain arbitrage bots and liquidators to exploit the flaw, acquiring cbETH collateral worth thousands by repaying only about $1 in debt. The error resulted in the liquidation of 1,096.317 cbETH, significantly impacting borrowers and leaving the protocol with substantial bad debt. In response, Moonwell swiftly reduced the borrowing and supply limits for cbETH to 0.01 to mitigate further losses. The team has not provided additional comments on the error's source or the vulnerability details.