Merge pull request #543 from moonwell-fi/mip-x37

Mip x37

Author: anajuliabit

CLAUDE.md

@@ -1 +1,2 @@
-- Always set the id in @proposals/mips/mips.json to 0 when creating new proposals
+- Always set the id in @proposals/mips/mips.json to 0 when creating new
+  proposals

chains/10.json

@@ -719,7 +719,7 @@
         "isContract": true,
         "name": "CHAINLINK_wrsETH_ETH_EXCHANGE_RATE"
     },
-      {
+    {
         "addr": "0x5fddda4866db63685018faa1bfc9bfce7072014c",
         "isContract": true,
         "name": "CHAINLINK_wrsETH_COMPOSITE_ORACLE"

chains/8453.json

@@ -1238,5 +1238,10 @@
         "addr": "0xccC994a46c0d81c934fd6c82d89f626aee336ade",
         "isContract": true,
         "name": "CHAINLINK_wrsETH_COMPOSITE_ORACLE"
+    },
+    {
+        "addr": "0xadcC226082E878371a3fc33c1f914dad7FB6a28D",
+        "isContract": false,
+        "name": "BAD_DEBT_REPAYER_EOA"
     }
 ]

proposals/mips/mip-b52/b52.md

@@ -0,0 +1,105 @@
+## MIP-B52: Bad Debt Remediation
+
+### **Summary**
+
+This proposal implements Anthias Labs' recommended actions to remediate the
+outstanding bad debt within select markets on Moonwell's Base implementation
+resulting from events which took place on October 10th, 2025 and November
+4th, 2025. This proposal also formalizes an allocation strategy for distributing
+excess reserves between cbXRP and VIRTUAL, based on both proportional debt share
+and contributor feedback on interest-rate dynamics.
+
+### **Background**
+
+Anthias has conducted a reserve and risk assessment on Moonwell Base following
+the two major incidents that produced bad debt in multiple markets. Their
+analysis included a review on current protocol reserve balances, updated minimum
+reserve targets, outstanding bad debt, and the proper distribution of excess
+reserves available for repayment among the highest interest markets.
+
+Moonwell holds approximately 1.89M USD in reserves, distributed across assets
+like WETH, USDC, cbBTC, AERO, etc. Significant idle reserves exist in certain
+markets, particularly USDC and cbBTC. These reserves can partially or fully
+cover existing bad debt without external funding.
+
+Anthias has identified 5.25M USD in required reserves to fully remediate all bad
+debt, with the largest deficits concentrated in cbXRP (2.57M USD), VIRTUAL
+(1.96M USD), AERO (248K USD), and other markets like MORPHO, EURC, and cbETH. No
+single market's bad debt can be resolved using only its own reserves,
+necessitating a coordinated proposal.
+
+### **Proposal**
+
+This proposal enacts the following changes on Moonwell Base only:
+
+1. Limit Reserve Auctions During Bad-Debt Remediation
+
+   - Reserve auctions on Base (and OP Mainnet, where applicable) will be limited
+     and minimized while bad debt is being repaid.
+   - Auctions will not be fully halted; contributors may still conduct small or
+     periodic auctions when necessary or when the opportunity arises.
+   - The intention is to conserve reserves during the remediation period while
+     maintaining flexibility for contributors.
+
+2. Redirect 100% of Reserve Accruals Toward Bad-Debt Repayment
+
+   - All future reserve income (interest margin, liquidation fees, protocol
+     revenue) will go directly to paying down outstanding bad debt.
+
+3. Utilize Excess Reserves in USDC and cbBTC
+
+   - Anthias identifies significant excess reserves in these markets.
+   - This proposal reduces 490,000 USDC and 3 cbBTC from their respective
+     markets to be used for bad debt repayment.
+   - These funds will be used to cover bad debt, prioritizing:
+     1. cbXRP
+     2. VIRTUAL
+     3. AERO, MORPHO, EURC, cbETH (in order of deficit)
+
+4. Adopt Minimum Reserve Targets
+
+   - Reserve auctions remain limited until each asset’s reserves reach or exceed
+     Anthias’ recommended minimum level.
+
+5. Adopt an Allocation Strategy for cbXRP and VIRTUAL
+
+   - These two assets are of high interest and with a significant portion of
+     shortfall being centered between these two assets. As such, there may be a
+     preference to pay off VIRTUAL first due its historically high interest
+     rate.
+
+6. Transparently Communicate Progress
+   - The Foundation or designated contributors will report ongoing metrics
+     including:
+     - Remaining bad debt
+     - Reserves used
+     - Reserve accrual rate
+     - Progress toward minimum reserve targets
+
+### **Rationale**
+
+Bad debt weakens protocol solvency, user confidence, and long-term
+sustainability. The Anthias analysis demonstrates both:
+
+1. The scale of the problem — multiple markets are underwater, with an aggregate
+   shortfall of ~$5.25 M.
+2. A clear, conservative path to remediation — using existing reserves, limiting
+   auctions, and redirecting future accrual allows Moonwell to address the issue
+   without external capital or token dilution.
+
+Limiting reserve auctions ensures the protocol does not drain capital too
+quickly while still allowing contributors flexibility to conduct small or
+periodic auctions when needed. Redirecting reserve accrual speeds up repayment
+using organic protocol revenue. Drawing from excess reserves in USDC and cbBTC
+markets allows immediate remediation of the largest deficits without sacrificing
+safety.
+
+In short: this plan protects the protocol, its users, and its long-term
+viability.
+
+### **Voting Options**
+
+- **Yes** — Adopt the Anthias bad-debt remediation plan: limit auctions,
+  redirect reserves, and use excess USDC/cbBTC to repay bad debt.
+- **No** — Reject the plan; continue current reserve operations.
+- **Abstain** — No preference.

proposals/mips/mip-b52/mip-b52.sol

@@ -0,0 +1,116 @@
+//SPDX-License-Identifier: GPL-3.0-or-later
+pragma solidity 0.8.19;
+
+import "@forge-std/Test.sol";
+
+import {MErc20} from "@protocol/MErc20.sol";
+import {IERC20} from "@openzeppelin-contracts/contracts/token/ERC20/IERC20.sol";
+
+import {HybridProposal, ActionType} from "@proposals/proposalTypes/HybridProposal.sol";
+import {AllChainAddresses as Addresses} from "@proposals/Addresses.sol";
+import {BASE_FORK_ID} from "@utils/ChainIds.sol";
+import {ProposalActions} from "@proposals/utils/ProposalActions.sol";
+
+/// @title MIP-B52: Bad Debt Remediation
+/// @notice Proposal to reduce reserves from two Base markets and transfer to EOA for repaying bad debt:
+///         1. Reduce 490,000 USDC from MOONWELL_USDC market
+///         2. Reduce 3 cbBTC from MOONWELL_cbBTC market
+///         3. Transfer all tokens to BAD_DEBT_REPAYER_EOA for swapping to VIRTUALS and cbXRP
+contract mipb52 is HybridProposal {
+    using ProposalActions for *;
+
+    string public constant override name = "MIP-B52";
+
+    // Reserve amounts to reduce
+    uint256 public constant USDC_AMOUNT = 490_000e6; // 490,000 USDC
+    uint256 public constant cbBTC_AMOUNT = 3e8; // 3 cbBTC
+
+    constructor() {
+        bytes memory proposalDescription = abi.encodePacked(
+            vm.readFile("./proposals/mips/mip-b52/b52.md")
+        );
+        _setProposalDescription(proposalDescription);
+    }
+
+    function primaryForkId() public pure override returns (uint256) {
+        return BASE_FORK_ID;
+    }
+
+    function deploy(Addresses, address) public override {}
+
+    function build(Addresses addresses) public override {
+        vm.selectFork(BASE_FORK_ID);
+
+        address eoa = addresses.getAddress("BAD_DEBT_REPAYER_EOA");
+
+        // === USDC Reserve Reduction ===
+        address moonwellUsdc = addresses.getAddress("MOONWELL_USDC");
+        address usdc = MErc20(moonwellUsdc).underlying();
+
+        _pushAction(
+            moonwellUsdc,
+            abi.encodeWithSignature("_reduceReserves(uint256)", USDC_AMOUNT),
+            "Reduce 490,000 USDC reserves from MOONWELL_USDC",
+            ActionType.Base
+        );
+
+        _pushAction(
+            usdc,
+            abi.encodeWithSignature(
+                "transfer(address,uint256)",
+                eoa,
+                USDC_AMOUNT
+            ),
+            "Transfer 490,000 USDC to BAD_DEBT_REPAYER_EOA",
+            ActionType.Base
+        );
+
+        // === cbBTC Reserve Reduction ===
+        address moonwellCbBtc = addresses.getAddress("MOONWELL_cbBTC");
+        address cbBtc = MErc20(moonwellCbBtc).underlying();
+
+        _pushAction(
+            moonwellCbBtc,
+            abi.encodeWithSignature("_reduceReserves(uint256)", cbBTC_AMOUNT),
+            "Reduce 3 cbBTC reserves from MOONWELL_cbBTC",
+            ActionType.Base
+        );
+
+        _pushAction(
+            cbBtc,
+            abi.encodeWithSignature(
+                "transfer(address,uint256)",
+                eoa,
+                cbBTC_AMOUNT
+            ),
+            "Transfer 3 cbBTC to BAD_DEBT_REPAYER_EOA",
+            ActionType.Base
+        );
+    }
+
+    function validate(Addresses addresses, address) public override {
+        vm.selectFork(BASE_FORK_ID);
+
+        address eoa = addresses.getAddress("BAD_DEBT_REPAYER_EOA");
+
+        // Validate USDC transfer
+        address usdc = MErc20(addresses.getAddress("MOONWELL_USDC"))
+            .underlying();
+        uint256 usdcBalance = IERC20(usdc).balanceOf(eoa);
+        assertGe(
+            usdcBalance,
+            USDC_AMOUNT,
+            "BAD_DEBT_REPAYER_EOA should have received USDC"
+        );
+
+        // Validate cbBTC transfer
+        address cbBtc = MErc20(addresses.getAddress("MOONWELL_cbBTC"))
+            .underlying();
+        uint256 cbBtcBalance = IERC20(cbBtc).balanceOf(eoa);
+        assertGe(
+            cbBtcBalance,
+            cbBTC_AMOUNT,
+            "BAD_DEBT_REPAYER_EOA should have received cbBTC"
+        );
+    }
+}

proposals/mips/mip-x35/x35.md

@@ -8,11 +8,11 @@
 
 A proposal to adjust the following risk parameters:
 
-| Parameters | Current Value | Recommended Value |
-| --- | --- | --- |
-| MAMO Borrow Cap | 12M | 3M |
-| tBTC Collateral Factor | 85% | 84% |
-| LBTC Collateral Factor | 85% | 84% |
+| Parameters             | Current Value | Recommended Value |
+| ---------------------- | ------------- | ----------------- |
+| MAMO Borrow Cap        | 12M           | 3M                |
+| tBTC Collateral Factor | 85%           | 84%               |
+| LBTC Collateral Factor | 85%           | 84%               |
 
 <sub> \*Cap changes will be implemented via Cap Guardian </sub>
 
@@ -21,11 +21,11 @@ A proposal to adjust the following risk parameters:
 A proposal to adjust the IR Parameters for USDC:
 
 | **USDC IR Parameters** | Current Value | Recommended Value |
-| --- | --- | --- |
-| Base | 0 | 0 |
-| Kink | 0.9 | 0.9 |
-| Multiplier | **0.072** | **0.08** |
-| Jump Multiplier | 9 | 9 |
+| ---------------------- | ------------- | ----------------- |
+| Base                   | 0             | 0                 |
+| Kink                   | 0.9           | 0.9               |
+| Multiplier             | **0.072**     | **0.08**          |
+| Jump Multiplier        | 9             | 9                 |
 
 ## OP Mainnet
 
@@ -36,18 +36,18 @@ A proposal to adjust the IR Parameters for USDC:
 A proposal to adjust the IR Parameters for USDT0 and DAI:
 
 | **USDT0 IR Parameters** | Current Value | Recommended Value |
-| --- | --- | --- |
-| Base | 0 | 0 |
-| Kink | 0.9 | 0.9 |
-| Multiplier | **0.061** | **0.067** |
-| Jump Multiplier | 9 | 9 |
+| ----------------------- | ------------- | ----------------- |
+| Base                    | 0             | 0                 |
+| Kink                    | 0.9           | 0.9               |
+| Multiplier              | **0.061**     | **0.067**         |
+| Jump Multiplier         | 9             | 9                 |
 
 | **DAI IR Parameters** | Current Value | Recommended Value |
-| --- | --- | --- |
-| Base | 0 | 0 |
-| Kink | 0.9 | 0.9 |
-| Multiplier | **0.061** | **0.067** |
-| Jump Multiplier | 9 | 9 |
+| --------------------- | ------------- | ----------------- |
+| Base                  | 0             | 0                 |
+| Kink                  | 0.9           | 0.9               |
+| Multiplier            | **0.061**     | **0.067**         |
+| Jump Multiplier       | 9             | 9                 |
 
 For more information refer to our forum post:
 [link](https://forum.moonwell.fi/t/anthias-labs-risk-parameter-recommendations/1759/6).