Moonwell cbETH Market $1.77M Shortfall; Reserves Allocate $0

Moonwell’s cbETH market carries a reported net liquidity shortfall of $1,768,664.86 while the protocol’s latest reserve plan assigns $0 to repay affected holders. The cbETH row in the reserve report lists $1,768,665.13 of gross bad debt and $7,360.83 of listed reserves.

Anthias Labs published the reserve allocation on Aug. 24. The allocation framework limits repayments to within each mToken market, distributes available reserves pro rata among eligible borrowers, caps repayments at the smallest of listed reserves, available cash or current borrower debt, and omits actions for amounts at or below $1,000.

Moonwell’s live Base markets API showed the imbalance at 11:28 UTC on Aug. 25. The API reported $1.93 million supplied and $1.94 million borrowed in the cbETH market, a negative $8,223.63 liquidity figure and a utilization rate of 100.43%.

Two suppliers reported withdrawal problems on Aug. 25. One non-liquidated account holding 1.05 cbETH with no borrowing or liquidation history showed about 0.0000000001 cbETH available for withdrawal. A second participant reported a similar issue on the same day.

The shortfall traces to a Feb. 15 oracle misconfiguration that briefly priced Coinbase Wrapped Staked ETH (cbETH) near $1.12 instead of roughly $2,200. Liquidators seized 1,096.317 cbETH after the mispricing, and initial protocol records showed about $1.8 million in bad debt.

A separate February recovery proposal later estimated roughly $2.7 million in net losses across about 181 borrowers liquidated between Feb. 14 and Feb. 18. That proposal recommended using treasury funds and future protocol revenue to fund repayments.

The published reserve allocation does not explain why cbETH received a $0 repayment. The report lists 2.8095 cbETH of reserves that would remain unused under the plan, but it does not state whether the $1,000 omission threshold, insufficient available cash, or the stated cap produced the zero allocation.

Moonwell’s help documentation notes that withdrawals depend on available liquidity. As of about 11:30 UTC on Aug. 25, neither Moonwell nor Anthias Labs had posted a response in the public forum thread addressing the allocation or a timeline for repayments.