Moonwell has suggested revisions to its interest‑rate model that could reduce monthly interest accrual on outstanding bad debt by roughly 85%, according to projections from Anthias Labs. The September 4 recovery update indicates that access to USDC and the ability to resume borrowing remain separate challenges.
Moonwell announced that governance proposal MIP‑X66 has entered the vote‑collection phase. The proposal bundles adjustments to market‑risk parameters, interest‑rate calculations, and the deployment of protocol reserves to recapitalize the USDC market.
The September 4 announcement outlined the expected actions after execution but did not specify reserve transfers or a repayment schedule for suppliers; the execution status of MIP‑X66 and any actual USDC transfers remain unconfirmed.
Moonwell’s risk adviser estimates that applying the proposed rate changes across seven Base markets would lower monthly interest on outstanding bad debt from approximately $338,785 to $50,273, assuming asset balances and utilization stay constant.
This represents a monthly saving of about $288,512, or roughly 85%. Governance delegate PGov highlighted the same dollar reduction in endorsing MIP‑X66.
These figures reflect reduced growth in existing debt rather than cash recovery, principal forgiveness, or supplier repayments; even under the projection, about $50,273 of monthly interest would continue to accrue.
The reserve component tackles a separate issue by proposing the withdrawal of available protocol reserves on Base and OP Mainnet for conversion to USDC and recapitalization. Moonwell clarified that these withdrawals would involve only protocol‑owned assets, not user funds.
The recovery effort follows the August 27 MAMO market incident on Base. Anthias’s August 28 post‑mortem identified inflated collateral accounting and oracle‑price manipulation, estimating roughly $9.1 million in residual borrower obligations at the August 27 evidence cutoff, including about 2.35 million USDC in outstanding borrower debt rather than current withdrawal liquidity.
A September 4 governance request highlights the challenges faced by newer suppliers. Forum user Dr_Bahmani reported depositing a five‑figure USDC position through Mamo on September 2 without a prominent incident warning, after which withdrawal liquidity became effectively unavailable.
The user requested detailed figures on market cash, performing and impaired debt, reserves, recoveries, and a policy for post‑incident deposits and fair withdrawals, explicitly stating that no compensation program existed and no final haircut had been set.
Moonwell noted in its September 4 update that security firm Zero Shadow has been engaged to support recovery efforts, though potential options remain under evaluation, and it provided no disclosed amount of recovered cash or guarantee of full supplier repayment.
Borrowers face an additional condition: Moonwell indicated that MIP‑X66 could lay the groundwork for considering the reopening of Base borrowing, but any re‑enabling would still be subject to further risk assessment, meaning execution alone does not constitute an announced borrowing restart.
