Pendle said large-scale liquidations in Morpho’s PT-reUSD/USDC market were not caused by an oracle configuration error. PT-reUSD, a token representing the right to redeem principal at maturity, briefly fell 3%, and that market price was reflected in the oracle benchmark. The decline reduced the collateral value of positions that repeatedly borrowed USDC to increase their PT exposure. Positions with health factors below 1.03 had less than 3% room to absorb a price decline and were liquidated. Pendle said the oracle uses the lower of PT’s 15-minute average market price and a benchmark based on a 6% annual discount rate through maturity. The oracle operated as designed, no bad debt emerged, and Morpho’s Pendle ecosystem vaults were unaffected.