Switchboard Oracle Compromise Brings Losses and Freezes to DeFi Apps on Sui and IOTA

Switchboard, which provides price feeds to decentralised finance applications, has shut down its oracles on Aptos, Sui, IOTA and Movement following reports that its Move-language implementations may have been compromised.

At least three applications have since reported losses, freezes or precautionary restrictions, CryptoSlate reported on 1 September.

Switchboard's contributors advised users to migrate temporarily to alternative oracles. The provider said it had received no similar reports about its Solana implementation. It has not published a root cause, a timetable for restoring the four Move deployments, or a complete list of affected integrations.

Virtue's account

The most detailed description of what happened came from Virtue, a credit protocol on IOTA. By Virtue's account, an attacker took over the signing keys for every one of the 14 oracles in Switchboard's IOTA mainnet queue.

With those keys, the attacker pushed IOTA's reported price to $10m, according to Virtue. The attacker then deposited a single IOTA and minted about 4.94m VUSD against it.

The feed was later driven close to zero, triggering 47 liquidations that affected 45 users. Virtue then suspended deposits, withdrawals, borrowing, repayments, flash loans and liquidations. It cautioned that VUSD would remain materially short of collateral until remediation was complete.

The sequence follows a familiar oracle-attack pattern. Lending protocols value collateral using external prices. If an attacker can dictate that price, near-worthless deposits can be borrowed against, and a subsequent crash can force the liquidation of other users' positions.

Full Sail and Volo

Full Sail, an exchange on Sui, confirmed that its vaults lost funds. It said deposits and withdrawals would stay paused until oracle integrity was restored and verified. It has not identified the vaults or assets involved, released transaction records or quantified the loss.

Full Sail's documentation says depositors in its vaults delegate the management of their liquidity to automated software, which shifts concentrated positions in response to live market prices. A separate document on oracle protection sets out several safeguards: Switchboard quotes are checked against prices in on-chain pools, each new update is tested against the previous 50 to 70 readings, and the system can reject a price or halt emissions. The exchange has not disclosed whether any of these safeguards triggered, whether they applied to the vaults that lost money, or what part they played in the losses.

For scale, DefiLlama put Full Sail's total value locked at roughly $229,000 on 31 August. On a rolling basis, its DEX volume came to roughly $50 for the past 24 hours, $2.99m for seven days and $9.1m for 30 days. Those windows include activity from before the incident and do not show how much value was lost.

Volo, also built on Sui, suspended deposits to and withdrawals from its vaults as a precautionary step, given that it relies on Switchboard. It said its vaults were unaffected and that "user funds were safe".

Concentrated oracle risk

The confirmed impact is uneven: an unquantified loss at Full Sail, price manipulation and a broad freeze at Virtue, and a precautionary pause at Volo.

The underlying networks appear to have kept running. Sui's status page showed all systems operational on 31 August, and IOTA's showed mainnet services working with listed incidents resolved. CryptoSlate said it could not establish equivalent status information for Aptos or Movement.

The episode highlights how oracle risk concentrates. When one provider serves several chains, a weakness in how its signing keys are secured can surface across many protocols at once. Application-level safeguards, such as checks against on-chain pool prices, are meant to act as a second line of defence, but there is not yet evidence on how well they performed here.

Several questions remain open:

• what caused the compromise, and whether any other Switchboard deployment was exposed;
• when the four Move deployments will be restored;
• how much Full Sail lost, and from which vaults;
• how Virtue plans to restore VUSD's backing and treat affected users.