Summary
During December, in collaboration with MoonwellDAO we launched the first “Frontier” vault - Moonwell Frontier cbBTC vault with higher risk appetite, while the $WELL token reward program got extended by MoonwellDAO for another 6 months (with reduction from 50m of WELL to 18 of WELL tokens), ensuring the steady growth of Moonwell Flagship (and Frontier) vaults in TVL.
Alongside automated frequent reallocations throughout December (based on our model), Block Analitica and B. Protocol team executed a few notable parameters adjustments for both growth and security reasons, with more details available below.
Month in review - December 2024
December saw a net growth of Moonwell Flagship vaults on Morpho’s Base deployment despite the mentioned reduction in WELL rewards, with a decrease in the stablecoin vaults while the new cbBTC vault saw inflow of over 300 of cbBTC, currently offering ~4% yield on cbBTC.
ETH: 28k → 28k (flat m/m)
USDC: 48m → 38m (20% decrease)
EURC: 11.8m → 9.6m (10% decrease)
cbBTC: 0m → 31m
WELL rewards program extension
As the initial WELL token rewards program expired on December 15, 2024 the Moonwell community voted on continuing with the program for 6 more months, with the significant reduction of WELL being rewarded. The extension program will last until June 15, 2025, during which the 18m of WELL tokens (reduction from 50m tokens in the initial period) will be distributed to Moonwell vaults depositors.
Moonwell Frontier cbBTC vault launched
In December, the first non-Flagship vault was launched by BA/BP and MoonwellDAO - Moonwell Frontier cbBTC vault, with the main goal of offering yield to cbBTC holders by providing liquidity to markets like LBTC/cbBTC, and PT-LBTC/cbBTC.
It’s important to note that this vault extends more on the risk horizon (hence “Frontier” in the naming) compared to the existing Flagship vaults, in an attempt to offer higher yield to bitcoin holders.
Initial markets for the Moonwell Frontier cbBTC vault:
PT-LBTC-29MAY2025/cbBTC market
Risk considerations TL;DR:
We chose a linear-discount oracle provided by the Pendle team to price the PT tokens on this market. This allows for pricing PTs at a discount based on a fixed yield to maturity, which allows for more accurately pricing long maturity PTs instead of using fixed redemption price.
Based on the analysis, we concluded that using a 15% discount for the oracle would an adequate margin of safety from potential spikes in implied PT yields (and drops in PT price), ensuring that the relevant Morpho pools do not reach effective LTVs approaching 100%.
Find the full risk assessment of PT-LBTC collateral by BlockAnalitica here.
LBTC/cbBTC market
The second market added to the Moonwell Frontier cbBTC vault has a pure LBTC as collateral. Here we proposed using a custom oracle that’d combine:
- Proof-of-Reserve LBTC feed by Redstone (used by other curators for other existing LBTC markets)
- LBTC/BTC market price feed by Chainlink as a fallback
In case PoR feed returns a value out of the predefined range (1.02 - 0.98 in this case, see full risk analysis for more details), fallback pricing is used.
The feed is upgradable, controlled by MoonwellDAO, enabling adjustments of the target range for PoR feed in case LBTC starts to generate yield.
The oracle code has been developed by SolidityLabs and audited by Halborn.
For more information about LBTC asset and liquidity analysis, please refer to the full risk assessment available here.
Proposed initial parameters are the following:
Parameter Changes and Proposals
During December, there were few parameter adjustments made on Moonwell Flagship vaults on Morpho’s Base deployment:
- Increased cbBTC/USDC supply cap to 100M due to the upcoming CB integration
- Set supply cap for cbETH/USDC (deprecated one) to zero
Furthermore, we’ve done an analysis on the supply cap changes for the cbETH, cbBTC, wstETH, and WETH markets for USDC vault due to increased USDC borrowing demand seen in November.
The changes are outlined below:
- Increase supply cap for cbETH, cbBTC, and WETH markets for USDC vault by 30m USDC from 20m to 50m USDC
- Increase supply cap for wstETH market on USDC vault by 10m USDC from 20m to 30m
Next Steps
Please feel free to comment or ask any question you may have regarding the reallocation model, parameter changes in this thread or via DMs, we’d be happy to hear and address them in a timely manner.
For live accurate data on Morpho Blue and MetaMorpho refer to our dashboard.
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