Moonwell Introduces Recovery Plan And DAO Consolidation Strategy After Oracle Misconfiguration Incident
In Brief
Moonwell’s proposed plan centers on compensating users affected by the cbETH incident while consolidating the Apollo deployment into the main DAO through an MFAM‑to‑stkWELL transition.
Decentralized finance (DeFi) platform focused on lending and borrowing, Moonwell announced that a proposed recovery plan for users affected by the cbETH Core Market incident on Base is now available on its governance forum. The proposal also outlines a path to integrate the Moonwell Apollo (MFAM) community into the broader Moonwell ecosystem governed by WELL.
Moonwell reported that between February 14th and 18th, 2026, a group of users supplying cbETH collateral on Base experienced liquidations that were not the result of market volatility or user error. According to the platform, the issue stemmed from protocol behavior linked to MIP‑X43. An onchain review of all liquidations during the affected period identified approximately $2.68 million in net losses across roughly 181 borrowers. The recovery plan was drafted in response to these findings and the platform’s acknowledgment that users were harmed through no fault of their own.
The proposal also addresses the status of Moonwell on Moonriver, which was fully deprecated on January 29th, 2026, following Chainlink’s decision to sunset oracle feeds on the network. This change required a gradual reduction of collateral factors across all markets until they reached zero under MIP‑R38. Moonwell on Moonriver operated under the Moonwell Apollo DAO, governed by MFAM, with a treasury separate from the Moonwell DAO on Base. With the Moonriver deployment now closed, the proposal seeks to consolidate Apollo into the primary Moonwell DAO to streamline governance, align incentives and retire legacy infrastructure.
As part of this consolidation, MFAM holders would convert their tokens into stkWELL at a 1:1.5 ratio, based on a snapshot taken at the time of proposal submission. This conversion is intended to bring MFAM holders into the WELL ecosystem and eliminate governance fragmentation. The consolidation also provides a framework to resolve issues tied to the Moonriver deployment, including the cbETH liquidation incident. Approximately $310,000 from the MFAM Apollo Treasury would be allocated for immediate remediation, with all liquidation activity reconstructed at the borrower level to ensure consistent compensation.
Treasury Payouts, Revenue‑Backed Repayments And MFAM‑to‑stkWELL Transition Proposed As Governance Votes Begin
The recovery plan outlines a phased approach. The first step involves distributing around $310,000 from the Apollo Treasury to affected borrowers on a pro‑rata basis as an initial remediation measure. The remaining losses would be repaid over time through future protocol revenue, including net fees and OEV revenue. The proposal also formalizes the transition for MFAM holders, who would receive stkWELL at the established ratio, with claims available for up to 12 months.
Two votes are required to advance the plan. MFAM holders must decide whether to approve the recovery framework and transition into the Moonwell DAO. If approved, the Moonwell DAO would then vote on treasury allocations, long‑term repayment commitments and execution authority. The proposal aims to conclude the Moonriver chapter while consolidating governance and focusing resources on active deployments.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
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Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
