Nostra halts borrowing after $STRK token price error

DeFi lending protocol Nostra has suspended borrowing for two liquid staking tokens following an issue with its price feeds, the platform announced on March 24.

According to Nostra, an error in its price feed inflated the reported values of xSTRK and sSTRK, two liquid staking derivatives of Starknet’s (CRYPTO:STRK) native STRK token, to nearly three times their actual market price.

“Such an inflated price feed could have caused unnecessary liquidations of otherwise safe positions, resulting in users with healthy positions getting liquidated,” the DeFi platform stated.

As a precaution, Nostra has disabled new borrowing against xSTRK and sSTRK deposits and advised users to withdraw existing collateral in these tokens.

“Since we don’t have a secondary (fallback) oracle to support these assets, as none are available, we are unable to fully prevent similar events from occurring in the future,” the protocol stated, citing the absence of a secondary oracle as a key reason for its decision.

“Our priority has always been and continues to be to keep existing user funds safe and with no fallback oracle, the risks outweigh the benefits,” Nostra emphasised, stressing that protecting user funds remains a priority.

The issue has drawn attention to Starknet’s DeFi ecosystem, which has a total value locked (TVL) of approximately $575 million, according to L2Beat.

Nostra is one of the larger lending protocols on Starknet, with a TVL of around $55 million, based on its website data.

On Nostra, users provide collateral in one token to borrow another.

The most commonly used collateral assets include Ether (CRYPTO:ETH), STRK, and stablecoins USDC (CRYPTO:USDC) and USDT (CRYPTO:USDT).

The affected xSTRK and sSTRK tokens are liquid staking derivatives issued by independent DeFi projects Endur and Nimbura.

At the time of reporting, the Starknet (STRK) price was $0.1733.