Monthly Governance Calls

[Boardroom]

Monthly Governance Call – April 2026 Recap

Call Recording

Welcome & House-Keeping

• Moderator: Alex (Boardroom)
• Speakers: Luke & Darren/0xMims (Lunar Labs), Chris (Anthias), and community Q&A
• Quick overview:
  • The monthly report for April is live on the governance forum. Joel’s data dashboard continues to power the governance metrics section of the report.
  • A good number of questions were submitted via the form this month and were addressed in a dedicated Q&A section at the end of the call.

Moonwell Core Contributor Updates (Luke @ Lunar Labs)

• Kelp DAO / rsETH exploit; Moonwell unaffected

  • A major exploit impacted Aave, Compound, and other large Ethereum protocols via Kelp DAO’s rsETH. Moonwell was not affected because Anthias Labs had already moved risk-off on rsETH last fall, well before the incident occurred.
  • Luke noted the silver lining without dwelling on competitors, and acknowledged that Aave and others have responded well (e.g., launching the DeFi United fund).

• Ethereum Mainnet launch

  • Launch is on track, pending a final audit of the governance and activation proposals.
  • Informed by recent exploits, the team is considering a more conservative initial market list. The current proposed set includes: ETH, cbBTC (excluding WBTC due to bridge risk), USDC, and USDT.
  • Two alternative approaches under community consideration:
    1. Launch with just the four markets above (most conservative).
    2. Add Lido Staked ETH as a fifth market, given its blue-chip status and broad demand as a borrow collateral.
  • Luke asked for community input on the initial market list before governance proposals go onchain. Feedback welcome on the forums or via replies on X.
  • There is also a forum post proposing to add Rocket Pool ETH (rETH) to Mainnet. Delegates are encouraged to weigh in.

• Bad debt remediation

  • MIP-X51 executed recently, pulling ~950,000 VIRTUAL from market reserves to cover VIRTUAL bad debt (~$677,000). This cleared approximately 45% of outstanding VIRTUAL bad debt in a single proposal. The remainder will continue to be repaid through monthly reserve accrual.
  • An additional 10 ETH was recovered from law enforcement (frozen by FixedFloat during the cbETH incident), along with ~$50,000 in stablecoins.
  • A second round of cbETH restitution payments is planned for May, returning additional recovered funds to the 203 impacted wallets.
  • The protocol is balancing two priorities month to month: bad debt repayment via protocol revenue, and direct restitution to impacted users.

• New market — Centrifuge deSPXA (tokenized S&P 500)

  • There is a forum post proposing to add Centrifuge’s deSPXA (a tokenized S&P 500 index fund) as a collateral market on Base. The team is waiting on a Chainlink-compatible adapter for price feeds before proceeding.
  • Use cases include borrowing stablecoins against stock holdings and potential Mamo portfolio rebalancing (e.g., 75% stocks / 25% BTC+ETH with automated rebalancing by the Mamo agent).
  • Luke noted broader interest in tokenized RWAs (precious metals, bonds, etc.) but emphasized that onchain DEX liquidity and TVL depth are prerequisites for safe onboarding. deSPXA currently has ~$4M TVL on Base with reasonable DEX liquidity.

• Mamo / Base app campaign wrap-up

  • The $10,000 Base Builder Grant campaign concluded. It brought in $3 million of USDC deposits into Mamo (routed directly into Moonwell Vaults and Markets) and offered double-digit APYs to participants throughout the campaign.

Governance & Community Proposals (Darren/0xMims @ Lunar Labs)

Recent governance activity has centered on audit-driven changes, liquidity incentives, and bad debt repayment:

• MIP-B58 (MFAM onboarding + cbETH restitution round 1) and MIP-B59 (Venice token listing) — both covered in last month’s recap — are complete.
• MIP-X51: Used ~950,000 VIRTUAL from market reserves to repay VIRTUAL bad debt. VIRTUAL bad debt has gone from ~$1.3M (at the time of the remediation proposal) to ~$800,000 remaining — roughly 45% cleared in one proposal.
• Delegates are asked to comment on the rETH Mainnet market proposal currently posted on the forum.

Risk & Parameter Updates (Chris @ Anthias)

Base Collateral Factor Reductions:

• LBTC: decreased from 82% to 80%
• tBTC: decreased from 81% to 80%

Base Interest Rate Curve Updates:

• USDC and EURC: multipliers decreased, reducing borrow rate at kink from ~6% to ~5%

OP Mainnet Cap Changes:

• weETH: both supply and borrow caps decreased due to very low onchain DEX liquidity. Note: EtherFi has since launched on OP Mainnet and DEX liquidity has improved, caps will be revisited.

April risk recommendations (posted to forum, governance proposal forthcoming):

The primary focus of the April proposal is stopping interest accrual on bad debt in markets where over 90% of total borrows is toxic. Three Base markets meet this threshold: VIRTUAL, cbETH, and cbXRP.

• Bad debt in these three markets is currently accruing ~$15,000/month in interest. The goal is to stop the bleeding.
• Approach: flatten the interest rate curve and increase the reserve factor in these markets. Existing (non-bad-debt) borrowers — a very small population — will lock in a favorable ~1% borrow rate. Any interest accruing on bad debt will be redirected back to protocol reserves rather than compounding the liability.
• Additional bad debt repaid via MIP-X51

Community Q&A Highlights

• Coinbase / Base tailwinds and the Clarity Act

  • Aerodrome trading volumes have increased recently; Coinbase is listing new assets (e.g., VIRTUAL). A potential Base token launch later this year or early next could be a further catalyst.
  • The Clarity Act has approximately 50/50 odds on prediction markets of being signed into law this year. If it passes, Luke expects broad positive impact for Coinbase, Base, and the wider crypto industry. He drew a comparison to the current market and early 2023.

• stkWELL/USDC and MAMO/USDC isolated market liquidity

  • These Morpho isolated markets currently have ~$26,000 of borrowable stablecoin liquidity. Supplier APY is approximately 4.4%. Liquidity is expected to grow as market conditions improve.

• Mamo dark mode

  • Dark mode is currently only available on the Moonwell app, not Mamo. Luke will take the request to the engineering team.

• OEV liquidation auctions

  • No. Purchasing priority access in the OEV auction requires actually submitting a price update, and if the winning bidder does not include a liquidation, the position remains open and becomes available to all liquidation bots permissionlessly within seconds. If no one bids at all, the standard open-market liquidation path activates shortly after. The system is designed so liquidations succeed regardless of auction participation.
  • Key distinction from Chainlink Smart Value Recapture (SVR): 100% of OEV priority fees flow directly to the Moonwell protocol, versus sharing a portion with Chainlink under SVR.

• RWAs and Base incentives

  • Moonwell is already engaged on this front via the deSPXA proposal (see above). Other tokenized RWA categories (metals, bonds) are on the radar but require deeper onchain liquidity before they can be safely onboarded.

• Aerodrome/Velodrome merger (July) & impact on AERO and VELO markets

  • In July, Aerodrome is expected to come to Mainnet and VELO holders will have a redemption window to convert to AERO at a set ratio. AERO is expected to become a multichain token.
  • The AERO market on Base should be unaffected and will continue operating — it has been one of Moonwell’s top protocol revenue-generating markets.
  • The VELO market on OP Mainnet may be impacted; Luke committed to reaching out to the Aerodrome team for clarity on the timeline and whether a market wind-down would be appropriate.

Action Items & Dates

1. Share feedback on the Ethereum Mainnet initial market list. Should Moonwell launch conservatively (ETH, cbBTC, USDC, USDT) or include Lido stETH?
2. Review and comment on the rETH Mainnet market proposal on the forum (delegates especially).
3. Watch for the second cbETH restitution governance proposal, targeted for May.
4. Submit questions for the next call (Thursday, May 28th). The Google Form will be posted on X and the forums toward the end of May.