To Moonwell Governance, Moonwell contributors, and the Mamo team,
I am creating this public governance record following guidance from Moonwell/Mamo support that the substantive questions concerning the affected mUSDC market must be addressed through governance.
Background
On September 2, 2026, I deposited a material five-figure USDC position through Mamo.
This deposit occurred:
- after the August 27 Mamo market incident;
- after Moonwell’s official post-mortem had been published;
- while deposits through Mamo remained enabled;
- without a prominent incident-specific, residual-debt, or withdrawal-liquidity warning appearing during the deposit process.
My position was allocated entirely to the affected Moonwell mUSDC Core Market on Base:
0xEdc817A28E8B93B03976FBd4a3dDBc9f7D176c22
My exact wallet address, transaction hashes, Mamo strategy address, and support-case records can be provided privately to a verified Moonwell or Mamo representative if required.
Current concern
Recent market observations have shown:
- effectively zero immediately redeemable USDC liquidity;
- 100% utilization;
- an extremely elevated displayed supply APY;
- supplier balances continuing to increase nominally despite the absence of meaningful withdrawal liquidity.
Moonwell’s official post-mortem reported approximately 2,345,280.55 USDC in residual borrower debt related to the incident.
The existence of nominal supplier balances, accrued interest, total supplied assets, or accounting reserves does not establish that the corresponding USDC is currently redeemable.
Similarly, the extremely high displayed APY should not be interpreted as compensation or proof of recovery. Interest accruing against a borrower receivable has economic value only to the extent that the underlying debt is ultimately collectible.
A supplier’s displayed balance may therefore continue increasing while actual recoverable principal and available withdrawal liquidity remain uncertain.
The post-incident depositor issue
The treatment of post-incident deposits is a separate governance question from the original incident.
If new USDC was accepted after the incident and after publication of the post-mortem, governance should clarify whether those funds were placed into an already impaired market and exposed to debt that existed before the deposits were made.
Post-incident depositors should not silently absorb a pre-existing shortfall without clear disclosure and an explicit governance policy.
I am not requesting automatic priority over pre-incident suppliers. I am requesting transparent and equitable treatment of users who deposited after the incident while deposits remained enabled and without a prominent market-specific warning.
Questions requiring specific answers
I respectfully request that Moonwell Governance and the responsible contributors answer each of the following questions separately.
1. Exposure to pre-existing debt
Are deposits accepted after August 27 exposed to residual borrower debt created before those deposits were made?
Does the current mUSDC exchange rate recognize the affected borrower receivable at full nominal value, even if part of that receivable may be impaired or unrecoverable?
2. Recognition of post-incident depositors
Will Moonwell and Mamo preserve a snapshot identifying users who deposited after the incident?
Will the recovery framework specifically address depositors who entered after the incident while deposits remained available without a prominent warning?
3. Complete market reconciliation
Please publish an updated reconciliation of the mUSDC market showing separately:
- actual USDC cash held by the market;
- total outstanding borrows;
- performing borrower debt;
- incident-related or potentially impaired debt;
- accounting reserves;
- recovered assets;
- funds expected from MIP-X66 or other governance actions;
- the estimated remaining supplier shortfall.
4. Practical effect of MIP-X66
Please explain precisely what MIP-X66 will accomplish for affected mUSDC suppliers:
- How much real USDC liquidity will reach the market?
- Will it restore supplier principal, reduce impaired debt, or only improve liquidity temporarily?
- What shortfall is expected to remain after execution?
- Does it provide any assurance of full supplier recovery?
- When is its practical effect expected to appear on-chain?
5. Expected supplier recovery
Please publish a preliminary recovery range under reasonable scenarios, even if it must later be revised.
Suppliers need to understand whether the expected outcome is:
- full recovery;
- partial recovery with a haircut;
- delayed recovery dependent on borrower repayments;
- recovery dependent on seized or recovered assets;
- or another remediation structure.
6. Use of reserves and recovered assets
Support has stated that reserves will be used to help improve liquidity. Please clarify:
- which reserves will be used;
- the amount available;
- when they will be deployed;
- whether recovered attacker funds, insurance proceeds, Safety Module resources, or other protocol funds will be allocated to affected suppliers;
- how any recovered funds will be distributed.
Accounting reserves displayed by the interface should also be clearly distinguished from actual USDC cash available for immediate redemption.
7. Fair withdrawal arrangements
If limited liquidity enters the market, will withdrawals remain strictly first-come, first-served?
This could create an unfair race in which automated systems or users who happen to be online receive the available liquidity before other affected suppliers.
Please consider a transparent pro-rata redemption mechanism, withdrawal queue, claim process, or another arrangement that prevents a race for scarce liquidity.
8. Continued acceptance of deposits
Why did deposits remain enabled after the incident and publication of the post-mortem while the market had unresolved residual debt and effectively unavailable withdrawal liquidity?
Please add a prominent warning to all relevant Moonwell and Mamo interfaces and consider pausing new deposits until the market’s liquidity and economic condition are clearly disclosed.
Requested governance actions
I respectfully request:
- Formal recognition and preservation of post-incident depositor records.
- Publication of a complete and updated mUSDC market reconciliation.
- Clear disclosure of how post-incident deposits are exposed to pre-existing debt.
- A specific explanation of the financial effect and execution timeline of MIP-X66.
- A preliminary supplier recovery range.
- A transparent policy for allocating reserves and recovered assets.
- Fair withdrawal arrangements that do not create a race between suppliers.
- Prominent warnings or suspension of new deposits until the situation is resolved.
This post does not assert that a compensation program currently exists, nor does it assume that a final supplier haircut has already been determined.
It is a formal request for transparent accounting, preservation of affected depositor records, and an on-record governance response regarding the treatment of funds accepted after a publicly known incident.
General statements that contributors are working to improve liquidity are appreciated, but they do not answer the specific accounting, recovery, and depositor-treatment questions raised above.
Official references
- Moonwell post-mortem:
Post-Mortem: MAMO Market Incident on Base - MIP-X66:
Moonwell - Lending made simple
Supporting Evidence
The following screenshots were captured on September 2, 2026, at the time of my deposit. DeFiLlama displayed the affected mUSDC market with no prominent incident warning and $0 available liquidity. The Moonwell interface simultaneously showed only 0.005 USDC of liquidity despite a displayed supply APY of 144.5%.
Thank you for providing a substantive response to each numbered section.
— An affected post-incident Mamo depositor