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Risk Disclaimer

Last updated: August 16, 2026

Important: Decentralized finance (DeFi) involves significant risks including the potential loss of all deposited funds. The information on this page is not financial, investment or legal advice. You should fully understand these risks before interacting with the Moonwell protocol.

General Risk Statement

Moonwell is an open-source, non-custodial decentralized finance protocol. Interacting with smart contracts on public blockchains carries inherent risks that differ fundamentally from traditional financial services. Past performance, including any displayed APY or APR rates, does not guarantee future results. You may lose some or all of the digital assets you deposit, supply, stake or otherwise commit to the protocol.

Smart Contract Risk

The Moonwell protocol operates through self-executing smart contracts deployed on Base, OP Mainnet, Moonbeam and Moonriver. While these contracts have been audited by Halborn Security and formally verified by Certora, and a standing Code4rena bug bounty exists, no audit or verification can guarantee the absolute absence of vulnerabilities. Exploits, bugs or unexpected interactions between contracts could result in the loss of deposited assets.

Market and Price Volatility Risk

Cryptocurrency prices are highly volatile and can experience rapid, significant declines. Price volatility affects:

Liquidation Risk

When you borrow assets on Moonwell, your supplied collateral secures the loan. If the value of your collateral falls below the protocol's liquidation threshold — due to price drops in your collateral asset or price increases in your borrowed asset — your position may be partially or fully liquidated. Liquidation involves the sale of your collateral, often at a discount, to repay the borrowed amount. You may receive back less than you deposited, or nothing at all.

Interest Rate Risk

Supply APY and Borrow APY rates on Moonwell are variable and change in real time based on pool utilization. The rates displayed at the time of deposit or borrow are not fixed and may change significantly. High utilization periods may increase borrowing costs rapidly. Low utilization may reduce supply yields below expected levels.

Vault Strategy Risk

Flagship vaults employ automated yield strategies managed by curators. While curators aim to optimize returns, strategy performance is not guaranteed. Vaults may underperform direct lending, and in adverse market conditions, deposited assets could lose value. Vault smart contracts introduce additional layers of code that carry their own smart contract risk.

Staking and Slashing Risk

Staked WELL (stkWELL) is subject to potential slashing during Shortfall Events — situations where bad debt in the protocol exceeds available reserves. If a Shortfall Event occurs, a portion of staked WELL may be permanently lost to cover protocol obligations. The 7-day cooldown period means stakers cannot immediately withdraw during market stress.

Network and Infrastructure Risk

Moonwell operates on four blockchain networks. Each network carries risks including:

Regulatory and Legal Risk

The legal and regulatory status of decentralized finance varies by jurisdiction and is evolving rapidly. Regulatory changes could restrict or prohibit the use of DeFi protocols, affect the value or transferability of digital assets, or create tax obligations. Users are responsible for understanding and complying with all applicable laws in their jurisdiction.

Oracle and Price Feed Risk

Moonwell's lending markets rely on price oracles to determine collateral values and liquidation thresholds. Oracle manipulation, delayed updates or incorrect price feeds could lead to incorrect liquidations or protocol losses.

Impermanent Loss and Opportunity Cost

Assets deposited in Moonwell lending markets or vaults may underperform other investment strategies. The opportunity cost of locking assets in DeFi protocols should be considered alongside the stated APY/APR returns.

No Insurance or Guarantees

Deposits on Moonwell are not insured by any government agency, deposit insurance corporation or private insurance policy. There is no guarantee of principal, interest or returns. The protocol does not offer refunds, compensation or recovery for lost assets, regardless of the cause.

Your Responsibility

By using Moonwell, you acknowledge that you have read and understood these risks. You are solely responsible for your investment decisions and for any losses you may incur. Moonwell recommends that you: