Nostra Pauses Borrowing After A Price Feed Glitch

Nostra, a well-known DeFi lending protocol on Starknet, has made a swift call to halt borrowing against two liquid staking tokens after a sudden price feed error. These tokens, xSTRK and sSTRK, saw their reported values spike to triple their actual prices on March 24. This situation pushed Nostra to freeze new collateral deposits and urge users to withdraw existing positions before things got worse.

Below, we break down what happened, how it impacts borrowers, and what steps Nostra is taking to protect user funds.

Quick Action on the Error

Nostra identified the mismatched prices for xSTRK and sSTRK soon after the glitch occurred. These tokens are derivatives of Starknet’s native STRK, which users stake to earn a share of network fees. Because the tokens were falsely valued at roughly three times their true worth, the system considered certain borrowing positions much riskier than they actually were.

Immediate Response

The mismatch could have triggered forced liquidations of borrowers who were not actually over-leveraged. Many would have faced abrupt losses, even if their loan-to-value ratio was safe. Aware of this threat, Nostra moved fast. It disabled further borrowing on xSTRK and sSTRK, telling anyone using these tokens as collateral to pull out as soon as possible.

No Backup Oracle

The root problem is that Nostra has only one price feed source for these staking tokens. Because no secondary oracle service exists, the protocol has no fallback if data goes wrong. As a result, Nostra acknowledges that similar incidents could happen unless a reliable alternative emerges. With user protection top of mind, the protocol decided that freezing the collateral option is better than letting borrowers face unforeseen risk.

Inside the Starknet Ecosystem

Starknet is an Ethereum layer-2 solution with zero-knowledge proofs at its core. By doing this, it scales transactions quickly while maintaining security. Launched in late 2021, Starknet’s total value locked (TVL) now sits at around $575 million, says L2Beat.

Nostra’s Role and Liquidity

Nostra is among the prominent DeFi projects in the Starknet ecosystem, holding approximately $55 million in total value locked. Borrowers can post collateral in one asset—like Ether or stablecoins—and receive loans in another. The two tokens at the center of this issue, xSTRK from Endur and sSTRK from Nimbura, let holders stay liquid while staking STRK.

Nostra’s swift action underlines the importance of reliable oracle data across DeFi platforms. A single glitch can send ripples through the entire ecosystem, causing forced liquidations and painful losses for users.

Nostra’s prompt freeze on borrowing highlights both the promise and the precariousness of DeFi. While these protocols strive to be user-friendly and transparent, they remain vulnerable to oracle mishaps. Until more robust backup systems exist, caution is vital for anyone depositing or borrowing assets. This stark reminder from Nostra underscores a central theme of DeFi: decentralization does not eliminate risk, so always keep a watchful eye on price feeds.