Moonwell Loses $8.7M to MAMO Price Manipulation Exploit on Base

The Exploit Mechanism

An attacker inflated the price of MAMO, a thinly traded collateral token, and used the artificially inflated value to borrow against it on Moonwell's Base deployment. The price manipulation allowed the attacker to withdraw far more in loans than the actual collateral was worth, resulting in a net loss of $8.7 million to the protocol.

Moonwell's Response

Moonwell announced the exploit on August 27 via X and immediately halted new borrowing across its Core Markets on Base. The protocol cut borrow caps to 1 wei on every Base core market—an effectively complete freeze on new loans—while it assessed the damage and implemented a fix. The move prevented further exploitation but locked existing borrowers out of additional credit lines.

Collateral Risk in Thin Markets

The incident underscores a known vulnerability in lending protocols that accept collateral from low-liquidity or thinly traded tokens. Price oracles that rely on spot prices or limited on-chain data can be manipulated when trading volume is sparse, allowing attackers to create false valuations for use in borrowing transactions. Moonwell's decision to disable borrowing rather than liquidate positions suggests the protocol was prioritizing prevention of additional losses over price recovery.