Woofun AI reports that Moonwell's latest reserve allocation plan assigns zero funds to address a significant liquidity deficit in its Base market, specifically targeting the Coinbase Wrapped Staked ETH (cbETH) position. This decision was formalized in a proposal published by risk service provider Anthias Labs, which outlines a strategy that leaves substantial bad debt unaddressed despite available protocol reserves.

The financial scale of the issue stems from a February oracle error that generated bad debt within the cbETH market. Current figures indicate a gross bad debt of $1,768,665.13 and a net shortfall of $1,768,664.86. Although $7,360.83 in reserves exists, the plan leaves 2.8095 cbETH unused.

Woofun AI data shows that these reserves are technically available but are structurally barred from deployment under the new guidelines.

Structurally, the allocation mechanism restricts repayments to individual mToken markets and applies a pro rata distribution among eligible borrowers. The proposal mandates omitting any actions where the repayment amount is at or below $1,000, while capping payouts at the lowest value among reserves, available cash, or current borrower debt. Consequently, the cbETH row results in a $0 allocation, though the report does not specify whether the $1,000 cutoff, cash constraints, or other factors drove this outcome.

As of 11:30 UTC on Aug. 25, neither Moonwell nor Anthias Labs had provided a response in the public forum thread regarding the proposal. This silence leaves the $1.77 million shortfall unresolved, marking a critical juncture for the protocol's risk management framework.