TLDR:

• Roughly 181 Moonwell borrowers on Base lost ~$2.68M due to oracle-driven cbETH liquidations from Feb 14–18, 2026. 
• Moonwell will allocate ~$310,000 from its Apollo Treasury as an immediate pro-rata repayment to all affected borrowers. 
• The remaining ~$2.37M will be repaid gradually through future protocol fees and OEV revenue via Sablier over 12 months. 
• MFAM holders will convert their tokens into stkWELL at a 1:1.5 ratio, consolidating Apollo DAO into Moonwell’s primary governance.

Moonwell has released a recovery proposal addressing unfair liquidations of cbETH collateral between February 14 and 18, 2026.

The incident affected roughly 181 borrowers on Base, resulting in approximately $2.68M in net losses. Protocol behavior tied to MIP-X43, not user error, drove the liquidations.

The plan combines treasury funds with future revenue and includes a transition for MFAM holders into the WELL ecosystem.

cbETH Liquidation Recovery Targets 181 Affected Borrowers

The Moonwell team conducted a full onchain review of all liquidation activity during the incident window. Each borrower’s loss was calculated on a net basis, meaning only realized economic harm qualifies for remediation.

The methodology accounts for all cbETH collateral seized, minus the USD value of debt repaid at the time of liquidation.

The proposal was direct about what caused the harm. “These users trusted Moonwell with their assets and were harmed through no fault of their own,” the post stated.

Crucially, cbETH was repriced at $2,200 per token to correct erroneous oracle values that contributed to the problem. This adjustment ensures that repayments reflect actual market conditions rather than distorted price data.

To begin repayments promptly, approximately $310,000 will be drawn from the Moonwell Apollo Treasury. This amount will be distributed pro-rata to affected borrowers based on their individual calculated losses.

The proposal described this allocation as “an immediate good-faith remediation without jeopardizing protocol stability.”

The remaining balance of roughly $2.37M will be repaid over time through future protocol revenue. This includes net protocol fees and OEV revenue under the current fee split structure.

All repayments will be claimable through Sablier over a 12-month window, after which unclaimed rewards expire.

MFAM Wind-Down Consolidates Apollo DAO Into Moonwell’s Primary Governance

The proposal also addresses the full deprecation of Moonwell on Moonriver, which was completed on January 29, 2026. Chainlink’s decision to sunset oracle feeds on Moonriver forced a gradual reduction of collateral factors. With MIP-R38 passed, all Moonriver markets reached a 0% collateral factor, formally closing the deployment.

As Moonriver operations wind down, the Apollo DAO governed by MFAM will consolidate into the primary Moonwell DAO governed by WELL.

The proposal described the transition as “simplifying governance, aligning incentives, and closing out legacy infrastructure.” MFAM holders will convert their holdings into stkWELL at a 1:1.5 ratio, based on a snapshot taken at proposal submission.

The proposal noted that this conversion brings MFAM holders “direct exposure to Moonwell’s ongoing development on Base and future deployments, while eliminating fragmentation across governance tokens and treasuries.” The MFAM-to-stkWELL conversion will also be claimable for up to 12 months via Sablier.

By addressing both the cbETH incident and the MFAM wind-down together, the proposal aims to close out Moonriver “in a clean, accountable manner.”

The Moonwell DAO will vote separately on treasury allocation, the long-term repayment commitment, and execution authority.

The US CLARITY Act, a highly anticipated bill aimed at providing greater clarity for the US crypto industry, could make it through Congress in just over a month, according to crypto-friendly US Senator Bernie Moreno.

“Hopefully by April,” Moreno told CNBC during an interview at US President Donald Trump’s Mar-a-Lago property in Florida on Wednesday.

Coinbase CEO Brian Armstrong joined Moreno for the interview, explaining that they were with representatives from the crypto, banking and US Congress at the World Liberty Financial (WLF) crypto forum to reach a solution on market structure.

“A path forward” is in sight, says Moreno

“One of the big issues that did come up in the past was this idea of stablecoins on rewards,” Armstrong said. The banking industry previously raised concerns that offering stablecoin yields could undermine traditional banking and shift deposits and interest away from banks.

While Armstrong had issues with the draft bill and withdrew his support for the CLARITY Act in January, he said there is “now a path forward, where we can get a win-win-win outcome here.”

“A win for the crypto industry, a win for the banks, and a win for the American consumer to get President Trump’s crypto agenda through to the finish line, so we can make America the crypto capital of the world,” Armstrong said. 

Armstrong said the crypto exchange previously couldn’t support the bill because it includes provisions that ban interest-bearing stablecoins and position the US Securities and Exchange Commission as the primary regulator of the crypto industry. The White House was reportedly disappointed by Coinbase’s decision to withdraw its support, describing the move as a “unilateral” action that blindsided administration officials.

Moreno admitted that the delay stems from “getting hung up” on the stablecoin rewards, which he said “shouldn’t be part of this equation.”

Crypto prediction platform Polymarket’s odds of the US CLARITY Act passing in 2026 briefly surged to 90% on Wednesday before falling to 72% at the time of publication.

Moreno shuts down idea of a Democrat-led midterm election

Meanwhile, Moreno dismissed the idea that a Democratic takeover of Congress could threaten the bill when asked. “The House isn’t going to go Democrat, and neither is the Senate,” Moreno said.