Proposal for Monthly Excess Reserve Distribution to cbETH Users

Proposals
1

Base Reserve Changes

The following table describes how reserve levels have changed over the period beginning on February 1, 2026 and ending on March 30, 2026.

The final two columns of the table show reserves above bad debt levels in each market, calculated as follows:

  • Total Excess Reserves = max(reserves_3.30 - bad_debt, 0)
  • Excess Reserves Accrued in Period = reserves_2.1 > bad_debt ? delta : 0

In other words:

If the reserve totals at the beginning of the period already cover any bad debt in that market, then the excess reserves will be used for bad debt repayment or cbETH remediation.

Market 2/1/26 Reserves (tokens) 3/30/26 Reserves (tokens) Delta (tokens) Bad Debt (tokens) Total Excess Reserves (tokens) Excess Reserves Accrued in Period (tokens)
AERO 186897.8754 290976.4661 104078.5907 468095.5875 0 0
cbBTC 0.6896 1.7721 1.0825 0.31223867 1.45986133 1.0825
cbETH 11.8315 58.082 46.2505 723.7282122 0 0
cbXRP 505909.112 521559.0698 15649.9578 1270308.087 0 0
DAI 1857.4258 1922.3383 64.9125 1524.804173 397.5341271 64.9125
EURC 24011.7873 24808.4252 796.6379 166522.3407 0 0
LBTC 0.2024 0.2115 0.0091 0.00001576 0.21148424 0.0091
MAMO 10221.1302 18949.7822 8728.652 44.32842002 18905.45378 8728.652
MORPHO 14310.273 14654.3341 344.0611 119467.4789 0 0
rETH 0 4.1839 4.1839 0.00094248 4.18295752 0
tBTC 0.0748 0.0877 0.0129 0.01209245 0.07560755 0.0129
USDbC 1.4154 2.5941 1.1787 0.033564 2.560536 1.1787
USDC 116909.7167 136189.1978 19279.4811 309799.1645 0 0
USDS 134.7924 155.5162 20.7238 1177.207668 0 0
VIRTUAL 875876.0422 938443.393 62567.3508 2113844.868 0 0
weETH 6.0219 7.0507 1.0288 0.0033177 7.0473823 1.0288
WELL 2598902.37 2827322.866 228420.4954 23482.67146 2803840.194 228420.4954
WETH 51.2863 63.927 12.6407 241.7374462 0 0
wrsETH 0.812 1.1744 0.3624 0.00047018 1.17392982 0.3624
wstETH 6.6956 35.6029 28.9073 81.97029387 0 0

Above table, normalized to USD.

Market 2/1/26 Reserves (USD) 3/30/26 Reserves (USD) Delta (USD) Excess Reserves (USD) Excess Reserves Accrued in Period (USD)
AERO $61,302.50 95440.28088 $34,137.78 $ - $ -
cbBTC $46,622.83 119809.0441 $73,186.21 $ 98,699.05 $ 73,186.21
cbETH $27,443.93 134724.9743 $107,281.04 $ - $ -
cbXRP $688,542.30 709841.894 $21,299.59 $ - $ -
DAI $1,857.43 1922.3383 $64.91 $ 397.53 $ 64.91
EURC $27,613.56 28529.68898 $916.13 $ - $ -
LBTC $13,730.68 14348.02189 $617.34 $ 14,346.95 $ 617.34
MAMO $143.10 265.2969508 $122.20 $ 264.68 $ 122.20
MORPHO $22,152.30 22684.90919 $532.61 $ - $ -
rETH $0.00 9999.830609 $9,999.83 $ 9,997.58 $ -
tBTC $5,066.36 5940.098856 $873.74 $ 5,121.05 $ 873.74
USDbC $1.42 2.5941 $1.18 $ 2.56 $ 1.18
USDC $116,909.72 136189.1978 $19,279.48 $ - $ -
USDS $134.79 155.5162 $20.72 $ - $ -
VIRTUAL $590,340.45 632510.8469 $42,170.39 $ - $ -
weETH $13,534.56 15846.84309 $2,312.29 $ 15,839.39 $ 2,312.29
WELL $10,395.61 11309.29146 $913.68 $ 11,215.36 $ 913.68
WETH $105,632.55 131668.1405 $26,035.59 $ - $ -
wrsETH $1,786.60 2583.96303 $797.37 $ 2,582.93 $ 797.37
wstETH $16,968.57 90227.96663 $73,259.39 $ - $ -
TOTAL $413,821.49 $ 158,467.08 $ 78,888.92

Projected Reserve Payout to cbETH Remediation

We propose using the reserves that have accrued over the past two months (in excess of any bad debt) to compensate users affected by the cbETH incident. Additionally, we recommend that every month going forward, any excess reserves (after covering bad debt) be distributed to the affected cbETH users in a similar manner.

To be concrete, we suggest that reserves continue to accrue in markets with existing bad debt (such as WETH and USDC), while excess reserves from markets without bad debt (or already covered such as cbBTC) be allocated toward remediating the impact on cbETH users. Excess reserves should be withdrawn, swapped to WETH, and transferred proportionally to impacted users.

This approach provides users with a clear expectation of when they will be made whole and gives the protocol a transparent path forward. We welcome community feedback on this proposal.

Market Excess Reserves Accrued in Period (tokens) Excess Reserves Accrued in Period (USD)
cbBTC 1.0825 $ 73,186.21
DAI 64.9125 $ 64.91
LBTC 0.0091 $ 617.34
MAMO 8728.652 $ 122.20
tBTC 0.0129 $ 873.74
weETH 1.0288 $ 2,312.29
WELL 228420.4954 $ 913.68
wrsETH 0.3624 $ 797.37
TOTAL $ 78,887.74
5 Likes
Recovery Plan: cbETH Incident and Moonwell Apollo Onboarding
Weekly Governance Recaps
3

Thank you for the roadmap, but the projected $39k/month is insufficient.

The previous restitution payment covered roughly 12% of our total net loss.

We should maintain this 12% monthly repair rate to ensure a timely recovery.

I propose that the DAO treasury supplement the gap between the monthly excess reserves and this 12% target.

Relying solely on reserves will take years, whereas consistent DAO backing demonstrates a true commitment to making users whole.

1 Like
4

If repayment were to proceed at this rate, that is approximately 1.45% repaid per month. That would take more than 5 years to repay the whole amount, which itself is a bit ridiculous.

But then, this is very likely a non-representative period, with much more liquidations than usual. This could easily take 10 years at this rate.

Can we take some portion of the reserves that are servicing the bad debt and use that to repay?

2 Likes
5

That is if the protocol survives, or if they don’t mess up again. 2 percent is being held hostage. The oracle failure isn’t my fault. Moonwell builds no confidence

2 Likes
6

Pay pack the victims in 3 separate payments following Q3, Q4 2026, and then Q1 2027. If it needs to come out of the reserve then so be it. It is not the best look right now for how this is being handled. Ask yourself is this one way to attract new clienteles if they knew this? I really do believe in this project, but man I’m not sure I can recommend others. Not because of the project, but I fear for anyone to have to go through this.

2 Likes