The Blame Game: A Circle of Responsibility-Dodging
In search of answers, jameis turned to Morpho’s governance forum and Discord, only to find that none of the involved parties—Morpho, Pyth Network, or Re7 Labs—would claim responsibility for the loss. Instead, each entity pointed the finger at the other:
- Morpho’s stance: We are oracle-agnostic, meaning vault curators like Re7 choose their own oracles. Our role is to provide the infrastructure.
- Pyth’s stance: Our prices were accurate. It’s the responsibility of Re7 (or even the user) to run an extra scheduler to ensure timely price updates.
- Re7 Labs’ stance: Yes, there was a timing issue, but that’s inherent to the push-based Oracle system. We’ll work on improving it in the future.
Despite the issue being clearly a failure in the system architecture, no one offered compensation, nor did anyone take direct accountability.
The Core Issue: Decentralized Responsibility
This incident is not an isolated case but highlights a deeper problem with decentralized systems: the lack of accountability. In traditional finance, if a brokerage mishandles a liquidation due to faulty data, there are legal avenues for recourse. But in DeFi, users are often left with forum replies about permissionless infrastructure, with no clear path to compensation.
A closer look reveals that Re7 Labs could have implemented safeguards, such as timestamp verification, to prevent the liquidation from occurring. Pyth could have improved its scheduling mechanisms to ensure updates were synchronized, while Morpho could enforce reliability standards for Oracle updates on its platform.
Unfortunately, none of these safeguards were in place, leaving the user exposed to loss. As decentralized finance grows beyond early adopters and whales, there needs to be an increased emphasis on risk curation and accountability. Without mechanisms for accountability, such as insurance, fund recovery processes, or clearer Oracle integration standards, events like this will continue to occur.
If DeFi is to become more accessible to a wider range of users, responsibility in these situations must be addressed. In the meantime, users like jameis are left to face the consequences of system failures that no one wants to claim responsibility for.
