Lending Protocol Moonwell Lowers Collateral Factors, Removes VELO and wrsETH Collateral Eligibility

On November 12, according to The Defiant, the MIP-X75 risk adjustment for lending protocol Moonwell has taken effect, reducing the collateral factors for select assets on Base and Optimism and removing VELO and wrsETH from eligible collateral.

On Base, the collateral factors for AERO, WELL, and MORPHO were lowered from 58%, 35%, and 40% to 55%, 20%, and 30%, respectively; on Optimism, VELO and wrsETH dropped from 50% and 20% to zero, while OP was reduced from 55% to 50%.

The reduction in collateral factors decreases the collateral support available for existing loans, which may trigger liquidation for positions even if token prices do not fall. Borrowers affected by these changes can repay a portion of their debt or deposit additional eligible collateral to restore their safety margin.