Decentralized lending protocol Moonwell has proposed no cbETH repayment in its latest reserve round, even as its Base market for Coinbase Wrapped Staked ETH carries a net shortfall of approximately $1.77 million.
The allocation proposal, published by risk service provider Anthias Labs on Aug. 24, leaves 2.8095 cbETH of listed reserves unused months after a February oracle error generated the bad debt. Moonwell's live Base markets API indicated that the imbalance persisted on Aug. 25, reporting $1.93 million supplied alongside $1.94 million borrowed, resulting in negative liquidity and 100.43% utilization in the cbETH market calculation.
Suppliers have reported difficulties withdrawing their funds. One non-liquidated participant with a 1.05 cbETH position and no borrowing history noted that only about 0.0000000001 cbETH was available to withdraw. A second participant reported a similar issue, though the total number of affected suppliers remains unestablished.
Anthias Labs stated that reserve repayments would remain within each mToken market, allocating them pro rata among eligible borrowers when reserves are insufficient, omitting actions at or below $1,000, and capping repayments at the lowest of reserves, available cash, or current borrower debt. While the cbETH row lists $1,768,665.13 of gross bad debt, a $1,768,664.86 net shortfall, and $7,360.83 of reserves, the report does not explain whether the $1,000 cutoff or another consideration resulted in the zero allocation.
The shortfall stems from a Feb. 15 oracle misconfiguration that priced cbETH near $1.12 instead of approximately $2,200. According to Anthias Labs, liquidators seized 1,096.317 cbETH, leaving the protocol with roughly $1.8 million in initial total bad debt. A subsequent February recovery proposal estimated about $2.7 million in net losses across roughly 181 borrowers liquidated between Feb. 14 and 18, proposing treasury funding followed by protocol-revenue repayments.
Moonwell's help material notes that withdrawals depend on available liquidity. Neither Moonwell nor Anthias Labs had responded in the public forum thread regarding the matter by late morning on Aug. 25.
