Moonwell Proposes Rate Changes to Cut Bad Debt Interest

Lending protocol Moonwell is proposing changes to its market risk settings and interest-rate models in an attempt to reduce bad debt. According to a projection by Anthias Labs, these rate changes could cut monthly interest accruing on bad debt by about 85%. This would save approximately $288,512 per month.

The proposal also includes the use of protocol reserves to recapitalize the USDC market. However, it is unclear when or if this will happen, as Moonwell's Sept. 4 recovery update left several key details unverified.

Moonwell stated that governance proposal MIP-X66 had entered its vote collection period, but did not confirm whether reserve transfers would occur or set a timeline for supplier repayment.