54.86951328 cbBTC in bad debt on Moonwell market as supplier seeks recovery plan
Key Facts
A supplier in Moonwell’s Base cbBTC market submitted a formal request to the governance forum on November 3, calling for a plan to address suppliers’ position that includes a timeline. The request comes as its author said the market had practically no cbBTC available for withdrawal in early November. The author added that each small repayment is recovered within hours through automated withdrawals, leaving suppliers with limited access to their assets. The request did not say withdrawals had stopped entirely, but described withdrawable liquidity as near zero. The demand puts the recovery plan and its timing before protocol governance, after liquidity restrictions persisted since the MAMO market incident.
In its weekly update for October 23 to 29, Anthias Labs estimated total bad-debt exposure in the cbBTC market at 54.86951328 cbBTC, worth 4,293,560.82 dollars. By contrast, the update showed reserves of 0.162 cbBTC, or 12,612.05 dollars. Comparing the bad-debt volume with available reserves shows how small the reserve was relative to the exposure the company identified that week. These are dated weekly figures, not a real-time reading of market conditions on the day the request was submitted. But they provide the latest detailed picture in the evidence of debt and reserves before the supplier’s call for a recovery plan.
The same update recorded average utilization in the cbBTC market of 97.51% during the week of October 23 to 29. Anthias’s weekly comparison also showed utilization rising from 91.85% to 100.00% in the latest reading in the comparison, which covered the week ended October 29. Higher utilization means a larger share of deposited assets was being used for lending, limiting liquidity available for withdrawal. The supplier said automated withdrawals recover small repayments within hours, explaining why it is difficult for any new liquidity to remain available to suppliers. By early November, the request described the market as having practically no cbBTC available for withdrawal.
The crisis stems from the exploitation of the MAMO market on the Base network on August 27, according to Anthias’s post-incident analysis. The company said the attack combined inflated collateral calculations with manipulation of MAMO’s price at the reference price provider. The analysis estimated the attacker’s total borrowing from Moonwell at 11,028,761.70 dollars, while the remaining loan balance was 9,131,342 dollars based on the prices used in the calculation. The analysis said liquidations began 32 seconds after the last successful borrow, and counted 595 confirmed liquidation operations across 594 transactions. The borrower’s remaining liabilities continued to be calculated using the reference prices adopted by Moonwell, according to the post-incident report.
The supplier asked Moonwell to publish a recovery plan with a timeline, a report on recovery efforts, and clarification of how any recovered funds or allocations from the protocol treasury would be distributed. It also called for regular accounting for the cbBTC market and consideration of distributing funds to current suppliers according to their shares. Moonwell said in an October governance summary that MIP-X69 received 98.8% support and was implemented on October 17, setting the cbBTC borrow rate at a fixed 1% and the reserve factor at 99%. These changes set borrowing and reserve-retention terms, but do not in themselves include a mechanism to distribute recovered amounts to suppliers. The request leaves a practical question before governance: what is the recovery timeline, and how will any recovered amounts or allocations be distributed among affected markets and their suppliers?