I had something in my bin that looked just like that. I figured it was some kind of fungus caused by the bin being too damp. I left off the top for awhile and it dried and disappeared. I saw no harm to my worms, but it was disgusting looking. It appeared and spread rapidly.

Good luck, Pete

What should I do?

Open up that long saved bottle of champagne to celebrate!

You appear to be the proud owner of a hardworking species of slime mold called cat puke. It is hard at work for you in your worm bin doing just what it is supposed to be doing with just the material it should be working with. Your job, as its specially selected curator, is to enjoy it and bask in it's presence. Sharing the viewing with others as you have is optional and only for the very generous.

Yes it is shocking but that is only to encourage you to learn more about all the varieties of fungi in the world and their uses.

To fully appreciate the beauty, grace and value of this item I encourage readers to view Paul Stamets: 6 ways mushrooms can save the world because just like you are working hard in many ways to recycle, reuse, compost, live gently on the earth so are other life forms.

http://www.ted.com/talks/paul_stamets_on_6_ways_mushrooms_can_save_the_world.html

Quickly this site, the slime mold photographed, will no longer be available to view as the substance works the kitchen scraps into food for your worms.

Thank you for allowing us to view the great picture you took just for us.

While visually dramatic they're harmless

Here is a link that might be useful: Slime Molds

Oh thank you so much for the comfort and education. I am amazed how worried and concerned I can be about worms. I couldn't get to sleep last night about it.

I will go to the supplied link and learn some more. Thank you.

They are pretty cool, and not actually fungi - used to be considered but now are their own kingdom. Most likely to be actual aliens in my view.

And they're smarter than they look:
http://www.scientificamerican.com/article.cfm?id=brainless-slime-molds

Basically some scientists have used them to replicate transportation and road networks, and found they do consistently well at this.

But others are right, harmless and in your bin, doing what the bin is supposed to be doing.

Thanks, boreal_wormer! You have solved the mystery of "What was that on the pile of wood chips last summer?" My theories were things like ...hmmmm... maybe it's a big dump of osprey poo... or eagle poo?! But nope- it was aethalium of Fuligo septica. Now I need to watch my bins more closely for such interesting things!

Harmless to the worms, but this stuff makes a big mess. It will run its course and be gone in a few days.