Moonwell said its MIP-X75 risk changes are now live. The changes reduce the collateral backing available for existing loans on Base and Optimism Mainnet and remove $VELO and wrsETH’s eligibility as collateral.
The lending protocol announced the changes’ implementation on Nov. 11. According to the proposal, on Base, AERO’s collateral factor drops from 58% to 55%, WELL’s from 35% to 20%, and MORPHO’s from 40% to 30%. On Optimism, $VELO’s factor drops from 50% to zero, OP’s from 55% to 50%, and wrsETH’s from 20% to zero.
A collateral factor is the share of an asset’s value that counts toward a borrower’s credit limit. Reducing the factor can make an existing loan eligible for liquidation even if token prices have not fallen. A zero factor means the asset adds nothing to that limit.
Loading post from X…
View post on XBorrowers affected by the changes can repay enough debt or add other eligible collateral to rebuild a cushion above the liquidation threshold. Moonwell warned borrowers backed by $VELO on Nov. 4 to take these steps before the changes took effect. The protocol’s borrowing documentation says liquidators can sell pledged assets to repay undercollateralized loans.
The Base changes mainly affect existing positions. Anthias Labs, which recommended the adjustments, said in its Oct. 27 analysis that borrowing on Base was already closed. The factors still determine how much debt collateral can support and how much other collateral a borrower can withdraw.
$VELO Feed Retirement Drives Removal
Anthias tied the removal of $VELO to Chainlink’s planned retirement of the VELODROME/USD price feed on Nov. 11. In its Nov. 3 recommendation, the risk firm said that continued reliance on the feed after updates stopped would leave Moonwell valuing $VELO at a frozen price.
MIP-X75 also sets fixed oracle prices of $0.02599706 for $VELO on Optimism and $0.01 for MAMO on Base. The proposal says these prices affect borrowers of those tokens, rather than providing collateral backing: both tokens have zero collateral factors under the package.
Using a Nov. 3 snapshot, Anthias estimated that removing $VELO’s borrowing power would make 64 accounts with about $1,288 in debt newly eligible for liquidation. In its Oct. 27 analysis, the firm estimated that the combined Base cuts would push eight accounts with about $2,497 in debt across the liquidation threshold. These are estimates made before execution, not a count of liquidations that have occurred.
The same October analysis called wrsETH’s zero factor the final step in its deprecation on Optimism. Anthias estimated that this change alone would make two positions with about $779 in debt newly liquidatable, and said both could avoid liquidation by exiting during the notice period.
Add A Comment
Comments are closed.