Moonwell DeFi protocol faces $8.7 million exploit and liquidity shortfall

The decentralized lending protocol Moonwell is facing significant liquidity issues and security exploits on the Base network. According to reports from CertiK, attackers successfully drained approximately $8.7 million by manipulating the price of the relatively illiquid MAMO collateral token to borrow cbBTC.

In a separate issue, Moonwell is dealing with a $1.77 million net shortfall in its cbETH market. This deficit stems from a February oracle misconfiguration that incorrectly priced cbETH. Risk service provider Anthias Labs noted that Moonwell’s latest reserve plan proposes $0 in cbETH repayments, leaving a significant gap between the bad debt created by the error and the recovery of funds for suppliers.

Following the exploit, Moonwell implemented precautionary measures on the Base network, including setting borrow caps to 1 wei to prevent further impact while investigations continue.