Nostra Halts Borrowing After Price Feed Error Inflates Token Values 300%

Nostra, a lending protocol on Starknet, has temporarily halted borrowing for two liquid staking tokens following the discovery of a critical issue with its price feeds. The decentralized finance (DeFi) protocol announced the pause on March 24, citing errors in its price feed that inflated the reported prices of xSTRK and sSTRK—two liquid staking derivatives of Starknet’s native STRK token—to approximately three times their actual value.

According to Nostra, the inflated price feed could have led to unnecessary liquidations of otherwise safe positions, potentially causing users with healthy positions to be liquidated. In response, the protocol has disabled further borrowing against xSTRK and sSTRK collateral deposits and recommended that users with existing deposits withdraw their collateral immediately.

Nostra acknowledged that it does not have a secondary (fallback) oracle to support these assets, making it difficult to prevent similar events in the future. The protocol emphasized that its priority is to keep user funds safe, and without a fallback oracle, the risks outweigh the benefits. This incident highlights the challenges faced by DeFi protocols in ensuring accurate price feeds and protecting user assets.

Starknet, the layer-2 scaling chain of Ethereum secured using zero-knowledge (ZK) proofs, launched its mainnet in late 2021. Nostra is one of the larger DeFi projects operating on the Starknet chain, with a total value locked (TVL) of approximately $55 million. Users on Nostra can post collateral in one token to borrow in another, with popular collateral tokens including Ether, STRK, and stablecoins USDC and Tether (USDT).

STRK, the native token of Starknet, is designed to be staked in exchange for a portion of the network’s fee revenues. xSTRK and sSTRK are liquid staking tokens issued by independent DeFi protocols Endur and Nimbura, respectively. This incident underscores the importance of robust price feed mechanisms in DeFi protocols to prevent such errors and protect user funds.