MIP-B54: Moonwell WETH Market Management and Reserve Reduction

Proposals Moonwell Improvement Proposal
1

MIP-B54: Moonwell WETH Market Management

Summary

This proposal deploys a new ownership wrapper for the WETH market on Base, allowing the protocol to receive and manage funds during reserve operations. The wrapper enables Moonwell to reduce WETH reserves without additional execution hiccups while maintaining governance control.

Background

The WETH market on Base relies on native ETH when reserves are adjusted, but the administrative contract cannot receive ETH directly. Because of this issue, reserve reduction operations cannot be executed as easily.

To address this problem, Moonwell contributors have designed an ownership wrapper that can receive native ETH, convert it to WETH, and forward all administrative actions. This creates a clean workflow for reserve management.

To be clear, this only effects the WETH market on Base.

Proposal

This proposal introduces the MWETHOwnerWrapper, audited by Halborn, a contract that serves as the new admin for the WETH market while remaining governed by the existing Governor module.

Deployment steps included in this proposal:

  1. Deploy the MWethOwnerWrapper implementation
  2. Deploy its TransparentUpgradeableProxy
  3. Initialize the wrapper with the WETH market, the WETH token, and TEMPORAL_GOVERNOR as owner
  4. Set the wrapper as pending admin of the WETH market
  5. Accept admin through the wrapper to finalize migration
  6. Reduce the current WETH reserves (347 WETH) to cover some of the remaining bad debt.

Rationale

Deploying the MWethOwnerWrapper provides a reliable way for Moonwell to manage WETH reserves on Base. By enabling the wrapper to receive native ETH and automatically convert it to WETH, reserve operations can execute consistently without execution-context limitations.

Additionally, Moonwell’s WETH reserves currently have around 347 WETH, or about 1M in USD terms. This allows the protocol to pay for another 20% of the bad debt incurred from 10/10 and the November oracle issue, putting Moonwell at halfway through paying the bad debt back.

Voting Options

  • For: Approve deployment of the MWethOwnerWrapper and migrate WETH market admin.
  • Against: Do not deploy the wrapper; reserve management remains limited.
  • Abstain: No preference.

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