For some reason, the new Oculus DK2 has extremely high chromatic aberrations from the darker areas. There is extremely high amount of red content that occurs when there is head moment, when the head is static, these distortions are less. I would categorize the distortion into 2 types :
1) Lens distortion : This causes red and cyan colors to appear at the edges of an image.
To fix this we need to adjust the inter ocular distance using the oculus config util and manually move the screw at the side of the rift to fine tune the IO distance.
2) Hardware distortion/ Pixel Refresh distortion : I am not very sure of this , but whenever they are darker pixels in the screen, the refresh rate for those pixels is extremely low. Which means when an area is dark we see the dark pixels move along with the head tracking direction, which causes extreme artifacts in the image.
To fix it just make sure you move the black point up by at-least 0.04% . ( My guess is when the pixel value is very dark , Oculus DK2 might be switching off the pixel and the pixel is taking time to come back with color. Hence lets just not switch the pixel off by making its value slightly higher than black .