Moonwell has a $1.8M liquidity hole and its latest plan allocates $0 to fix it

Decentralized lending protocol Moonwell has proposed no cbETH repayment in its latest reserve round, even as the Base market for Coinbase Wrapped Staked ETH carries a $1.77 million net shortfall.

The allocation, published by risk service provider Anthias Labs on Aug. 24, would leave 2.8095 cbETH of listed reserves unused months after a February oracle error created the bad debt.

Moonwell’s live Base markets API showed the imbalance was still present at 11:28 UTC on Aug. 25. It reported $1.93 million supplied and $1.94 million borrowed, with negative $8,223.63 liquidity and 100.43% utilization in its cbETH market calculation.

One non-liquidated supplier said a 1.05 cbETH position with no borrowing or liquidation history showed about 0.0000000001 cbETH available to withdraw. A second participant reported a similar problem on Aug. 25, although the two complaints cannot establish how many suppliers were affected.

What the reserve plan says, and what it does not explain

Anthias Labs said reserve repayments would stay within each mToken market. When reserves are insufficient, the plan would allocate them pro rata among eligible borrowers, omit actions at or below $1,000, and cap repayments at the lowest of reserves, available cash, or current borrower debt.

The cbETH row lists $1,768,665.13 of gross bad debt, a $1,768,664.86 net shortfall, and $7,360.83 of reserves, but the report does not say whether the $1,000 cutoff, available cash, or another consideration produced the $0 allocation.

The shortfall traces back to a Feb. 15 oracle misconfiguration that priced cbETH near $1.12 instead of roughly $2,200. Anthias Labs said liquidators seized 1,096.317 cbETH and left the protocol with about $1.8 million in initial total bad debt.

A February recovery proposal later calculated about $2.7 million in net losses across roughly 181 borrowers liquidated between Feb. 14 and 18, and proposed treasury funding followed by protocol-revenue repayments.

Moonwell’s help material says withdrawals depend on available liquidity, so the API reading and two public complaints point to an unresolved liquidity question.

Moonwell and Anthias Labs had not responded in the public forum thread by about 11:30 UTC on Aug. 25.