Reserve Recommendations June 2026
This proposal outlines targeted actions to address Moonwell’s outstanding bad debt on Base while continuing remediation efforts for users affected by the cbETH incident.
Currently, the protocol has approximately $5.1M in bad debt across its core markets, and $738K in reserves. We propose two key initiatives: (1) using protocol reserves to repay $550K of bad debt from addresses with zero collateral, and (2) withdrawing 1.45 cbBTC from the reserves and swapping it to WETH in preparation for distribution to users affected by the cbETH incident. This swap, along with the ~10 ETH already recovered from law enforcement, will be distributed in a future round once the final WETH amount is confirmed after the swap.
Bad Debt & Reserves
The table below summarizes the current status of bad debt and reserves in Moonwell’s core markets on Base.
| Market | Price | Bad Debt (tokens) | Bad Debt (USD) | Current Reserves (tokens) | Current Reserves (USD) |
|---|---|---|---|---|---|
| cbETH | $ 2,376.95 | 673.4712991 | $ 1,481,636.86 | 1.0905 | $ 2,592.06 |
| cbXRP | $ 1.35 | 757382.1247 | $ 1,029,131.86 | 3147.9683 | $ 4,256.05 |
| VIRTUAL | $ 0.75 | 1257220.032 | $ 990,374.80 | 16652.5804 | $ 12,489.44 |
| WETH | $ 2,101.47 | 242.0337972 | $ 514,770.80 | 74.4075 | $ 156,364.76 |
| MORPHO | $ 2.29 | 119637.2844 | $ 271,043.06 | 14771.2359 | $ 33,870.44 |
| USDC | $ 1.00 | 231878.8672 | $ 231,807.00 | 69573.3004 | $ 69,573.30 |
| wstETH | $ 2,595.53 | 82.11552531 | $ 215,755.17 | 35.6428 | $ 92,511.89 |
| AERO | $ 0.44 | 472534.323 | $ 208,909.13 | 305721.6534 | $ 134,211.81 |
| EURC | $ 1.16 | 168241.3441 | $ 195,935.66 | 25767.0938 | $ 29,915.60 |
| cbBTC | $ 76,612.75 | 0.3129057585 | $ 24,264.67 | 1.7786 | $ 136,263.44 |
| DAI | $ 1.00 | 1529.945898 | $ 1,529.35 | 1955.369 | $ 1,955.37 |
| USDS | $ 1.00 | 1056.937176 | $ 1,056.50 | 164.875 | $ 164.88 |
| tBTC | $ 76,476.61 | 0.01211561 | $ 942.73 | 0.0878 | $ 6,714.65 |
| WELL | $ 0.00 | 23604.08201 | $ 107.79 | 2860027.174 | $ 11,440.11 |
| weETH | $ 2,301.54 | 0.00331817 | $ 7.73 | 7.0507 | $ 16,227.48 |
| rETH | $ 2,446.19 | 0.0009361799 | $ 2.31 | 4.1893 | $ 10,247.84 |
| LBTC | $ 76,919.32 | 0.0000155425 | $ 1.21 | 0.2117 | $ 16,283.82 |
| wrsETH | $ 2,253.25 | 0.0004682241 | $ 1.07 | 1.1744 | $ 2,646.22 |
| USDbC | $ 1.00 | 0.0335857356 | $ 0.03 | 3.271 | $ 3.27 |
| VVV | $ 19.81 | 0 | $ - | 26.9944 | $ 534.62 |
| TOTAL | $ 5,167,277.74 | $ 738,267.02 |
Bad Debt Repayment
We recommend that the protocol use its reserves to repay the bad debt on behalf of the following addresses. These addresses are currently supplying no collateral, which means their debt positions can be safely repaid without risk to the protocol. This action will help recapitalize the affected markets. The total bad debt repayment for this proposal amounts to approximately $550K.
| Address | Repayment Amount | Repayment Token | Repayment USD |
|---|---|---|---|
| 0x3b87f7d473550ef9e53e46baae856608f8b8a0c4 | 74.4075 | WETH | $ 156,365.13 |
| 0xa98e339f5a0f135792286d481b4e23d91a667d3f | 262817.3242 | AERO | $ 115,639.62 |
| 0x42ecd332d47c91cbc83b39bd7f53cebe5e9734bb | 35.6428 | wstETH | $ 92,511.89 |
| 0xedb0c9bbee5a799340480efc31c0e07cad54d646 | 43865.80597 | USDC | $ 43,865.81 |
| 0xa98e339f5a0f135792286d481b4e23d91a667d3f | 14771.2359 | MORPHO | $ 33,870.44 |
| 0x42ecd332d47c91cbc83b39bd7f53cebe5e9734bb | 25767.0938 | EURC | $ 29,915.60 |
| 0x8c40a7d8c37b30c8a4b228ca0885e65444a676a0 | 25707.49443 | USDC | $ 25,707.49 |
| 0x42ecd332d47c91cbc83b39bd7f53cebe5e9734bb | 42904.3292 | AERO | $ 18,835.00 |
| 0xa98e339f5a0f135792286d481b4e23d91a667d3f | 16652.5804 | VIRTUAL | $ 12,489.44 |
| 0x6a8ee608d88db389796b9c02a1aaa36b89ac660c | 0.14764634 | cbBTC | $ 11,311.59 |
| 0x5877022fe1a776e5275ed535b50d83a69634089c | 0.12540986 | cbBTC | $ 9,607.99 |
| TOTAL | $ 550,120.00 |
cbETH Remediation
We also propose distributing the next round of WETH to users affected by the cbETH incident.
To facilitate this, we recommend that the protocol withdraw 1.45 cbBTC and swap it for WETH (1.45 cbBTC ≈ 53.33 WETH). In addition, the protocol has recovered 9.99984 ETH from law enforcement, which will also be distributed to affected users.
This brings the total distribution for this round to 63.33 WETH.
Current repayment progress:
- WETH distributed so far: 169.26714134
- Remaining to be repaid: 1,208.01108186
We are currently 12.29% of the way toward full repayment. This proposed round will increase progress to approximately 16.9%.