security
Moonwell Loses Approximately $8.7 Million Due to Collateral Manipulation on Base
On August 27, Moonwell reported a security incident on its Core Market on the Base network, resulting in an estimated loss of $8.7 million due to collateral manipulation. The protocol responded by drastically limiting borrowing activity, and the incident has impacted token prices.
AS1 News
Moonwell announced a security breach in its Core Market on the Base blockchain, caused by an attacker manipulating collateral prices. The attacker used a low-liquidity asset, MAMO, as collateral, artificially inflating its value to obtain cbBTC. In response, Moonwell implemented measures to cap borrowing at 1 wei across all Core Markets, effectively halting new borrowing. Preliminary estimates from CertiK and PeckShield suggest the damage amounts to approximately $8.7 million. Following the incident, the price of WELL tokens dropped by around 13%, while MAMO declined by 9%. The protocol has not yet released a comprehensive report detailing the total bad debt or potential recovery strategies.
The incident highlights vulnerabilities in collateral management within DeFi protocols on Layer 2 networks, emphasizing the need for enhanced security measures.