DeFi lender proposes bad-debt fix, but user USDC funds remain locked

Lending protocol Moonwell's proposed rate changes could cut monthly interest accruing on bad debt by about 85%, according to Anthias Labs' projection. Its Sept. 4 recovery update leaves access to USDC and a return to borrowing as separate hurdles.

Moonwell said in the update that governance proposal MIP-X66 had entered its vote collection period. The package combines changes to market risk settings, interest-rate models and the use of protocol reserves to recapitalize the USDC market.

The Sept. 4 announcement described what would happen after execution, without confirming reserve transfers or setting a supplier repayment timetable. MIP-X66's subsequent execution status and actual USDC transfers remain unverified.

Moonwell relayed its risk adviser's estimate that the proposed rate changes across seven Base markets would reduce monthly interest on outstanding bad debt from about $338,785 to $50,273, assuming balances and utilization remain unchanged.

The projected saving is $288,512 a month, or roughly 85%. Governance delegate PGov cited the same dollar reduction in supporting MIP-X66.

… Continue reading the full article at the original source below.