AlphaFi is winding down its Sui-based lending protocol AlphaLend after an ALPHA oracle misconfiguration created bad debt, with the Sui Foundation stepping in to support its solvency, Sui said Friday.
AlphaFi said certain loans backed by ALPHA had become substantially undercollateralized. “That bad debt has now been fully covered,” the team said. “The protocol is solvent, and all user funds are safe.”
The protocol is in maintenance mode: new deposits and loans are disabled, while withdrawals remain open. Existing borrowers are being told to unwind their positions and withdraw their assets.
DefiLlama recorded about $63.5 million in total value locked in AlphaFi’s lending markets at 5:31 p.m. ET on Sept. 25, before the wind-down announcement.
AlphaLend’s documentation says it relies on oracle prices to value collateral and determine liquidations. Sui said its security team identified the misconfiguration and helped resolve it. Sui’s notice did not specify the faulty setting, the amount of bad debt or the size and form of the Foundation’s assistance.
Slush Users Told to Exit Four Strategies
Slush told users to withdraw from its USDC, SUI, $WAL and DEEP Strategies, which are provided by AlphaFi. It said principal and generated yield were safe and could be withdrawn immediately, with no waiting period.
Users with pending withdrawal requests should cancel them and submit new ones to receive funds instantly, Slush said. AlphaFi said it had removed the $WAL vault’s lock period.
Slush’s USDsui and XAUM Strategies continue to operate normally through a different provider, the wallet said.
AlphaFi has also discontinued its ALPHA vault and removed its lock period, allowing ALPHA withdrawals at any time.
AlphaFi said it is supporting the Foundation’s investigation and that recovery of amounts owed is being pursued. It pledged to oversee the wind-down until the last user has withdrawn.
