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Moonwell reserve plan allocates $0 to cbETH repayment amid shortfall
CryptoSlate reports Moonwell’s cbETH market still shows negative liquidity of $8,223.6 with 100.4% utilization on Aug. 25.
Decentralized lending protocol Moonwell is facing an ongoing cbETH repayment gap, with its latest reserve round proposing no cbETH repayment allocation even after a February oracle error left bad debt on Base markets, CryptoSlate reports.
According to a risk-service-provider snapshot published by Anthias Labs on Aug. 24, Moonwell’s cbETH listed reserves would leave 2.8095 cbETH unused months after the incident. Moonwell’s live Base markets API also showed the imbalance persisted as of 11:28 UTC on Aug. 25, when the protocol reported about $1.93 million supplied and $1.94 million borrowed, alongside negative liquidity of $8,223.63 and 100.43% utilization in the cbETH market calculation.
The cbETH row in the Anthias Labs report lists $1,768,665.13 of gross bad debt, $1,768,664.86 of net shortfall, and $7,360.83 of reserves. While the protocol described a framework for reserve repayments, including pro rata allocations to eligible borrowers when reserves are insufficient and omitting actions at or below $1,000, the report did not specify which condition resulted in the $0 allocation for cbETH repayments.
The underlying shortfall traces 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 that the protocol was left with about $1.8 million in initial total bad debt, while a later February recovery proposal calculated about $2.7 million in net losses across roughly 181 liquidated borrowers, CryptoSlate adds.