Moonwell lost roughly $8.7 million on Thursday after an attacker manipulated the price of MAMO, a small-cap token the lending protocol accepts as collateral on Base, and used the inflated position to borrow real assets.
The protocol had no faster remedy than shutting itself down. Moonwell's response was to set borrow caps for every core market on Base to 1 wei, which stops new borrowing across the entire deployment, and to set supply caps for MAMO and WELL to the same level. Listing a token with about $1 million in daily volume as collateral is a governance decision, and on Thursday it cost the protocol more than four times its annualized revenue.
Blockchain security firms CertiK and PeckShield both put the loss at about $8.7 million. Blockaid, which flagged the activity as it happened, said it observed 50.6 cbBTC worth more than $4 million drained from Moonwell's mCBTC market. The proceeds have been consolidated into 8,728,318 DAI at an Ethereum address that was empty until Aug. 21.
"We are aware of an issue affecting the MAMO Core Market on Base and are actively investigating," Moonwell said at 7:21 a.m. ET, about two hours after the borrowing began. "As a precaution, borrow caps for all Core Markets on Base have been set to 1 wei, preventing new borrowing and limiting the potential for further impact."
