Moonwell Proposes Bad-Debt Fix, But User Funds Remain Locked

Moonwell, a lending protocol, has proposed rate changes to address its bad debt issue. According to Anthias Labs' projection, this would cut monthly interest accruing on bad debt by about 85%. The proposal, MIP-X66, is currently in its vote collection period.

The update also mentioned that governance delegate PGov cited the same dollar reduction in supporting MIP-X66. This measure does not account for cash recovered, principal forgiven, or money returned to suppliers. Even with the projected savings, about $50,273 in monthly interest would continue accruing.

Moonwell has proposed withdrawing available protocol reserves on Base and OP Mainnet for conversion to USDC and recapitalization. This would address a different problem, as it involves only protocol-owned assets and does not withdraw or transfer user funds.