Moonwell faces 1.8M liquidity shortfall, allocates 0 for repayment

Decentralized lending protocol Moonwell has proposed no cbETH repayment in its latest reserve round, despite a $1.77 million net shortfall in the Base market for Coinbase Wrapped Staked ETH. The allocation, published by Anthias Labs on Aug. 24, leaves 2.8095 cbETH of listed reserves unused months after a February oracle error created the bad debt. As of Aug. 25, Moonwell's API showed $1.93 million supplied and $1.94 million borrowed, resulting in negative $8,223.63 liquidity and 100.43% utilization in its cbETH market. One supplier reported a 1.05 cbETH position with negligible withdrawal availability. Anthias Labs stated that reserve repayments would remain within each mToken market, allocating reserves pro rata among eligible borrowers and capping repayments at the lowest of reserves, available cash, or current borrower debt. The cbETH row lists $1,768,665.13 of gross bad debt and a $1,768,664.86 net shortfall, but does not clarify the reasoning behind the $0 allocation. The shortfall originated from a Feb. 15 oracle misconfiguration that mispriced cbETH. A recovery proposal estimated $2.7 million in net losses across 181 borrowers liquidated between Feb. 14 and 18. Moonwell's help material indicates withdrawals depend on available liquidity, highlighting an unresolved liquidity issue.

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