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Moonwell proposes changes to cut bad-debt interest on USDC market
The proposal modeled a drop in monthly interest accruing on outstanding bad debt from about $338,785 to $50,273, while saying reserve withdrawals would not involve user USDC.
Moonwell has put forward a governance package, MIP-X66, aimed at reducing how much interest accrues on bad debt in its USDC market on Base, according to CryptoSlate. Anthias Labs projected that proposed rate changes across seven Base markets would cut monthly interest on outstanding bad debt from about $338,785 to $50,273, a savings of roughly 85%.
The update frames two separate hurdles for suppliers, according to the report. Moonwell said its rate changes and other model or risk-setting adjustments are intended to slow interest growth on already-stored debt, but it did not confirm reserve transfers or provide a supplier repayment timetable in its Sept. 4 announcement.
Moonwell also described a reserve component that would withdraw protocol-owned reserves on Base and OP Mainnet for conversion to USDC and recapitalization. The protocol said those withdrawals would target only protocol-owned assets and would not withdraw or transfer user funds, while the actual execution status and USDC transfers remain unverified.
The recovery effort follows an Aug. 27 MAMO market incident on Base, which Anthias described as involving inflated collateral accounting and oracle-price manipulation, and estimated roughly $9.1 million in residual borrower obligations at its evidence cutoff. Moonwell’s Sept. 4 governance process is in a vote collection period as suppliers question whether cash, performing and impaired debt, reserves, and recoveries can be separated and verified, CryptoSlate reported.