Moonwell Token Becomes Deflationary Following MIP-X37 Passage

Moonwell, a decentralized lending and borrowing protocol, has announced that its native WELL token has become deflationary following the passage of Moonwell Improvement Proposal (MIP-X37). This marks a significant shift in the token's economic model, with protocol buybacks now exceeding the rewards distributed to staked WELL holders. The announcement was made by Luke Youngblood.eth, a prominent figure associated with the project, who urged community participation in the ongoing vote.

"With the passage of MIP-X37, the Moonwell token will become deflationary," Youngblood stated in a recent tweet. He further highlighted, "For the first time, more WELL was acquired through buybacks than is being rewarded to staked WELL holders. Please vote on this important proposal, which was based on overwhelming community feedback." This development aligns with a broader trend in decentralized finance (DeFi) towards tokenomics models that prioritize scarcity and long-term value.

MIP-X37 aims to rebalance liquidity incentives across Moonwell's deployments on Base, Optimism Mainnet, and Moonbeam Network. This proposal builds upon previous governance actions, such as MIP-X26, which established monthly reserve auctions converting protocol revenue into WELL buybacks to tighten supply. The protocol's shift to a net deflationary state suggests a strengthened focus on sustainable value accrual for token holders.

Moonwell operates as an open and decentralized lending and borrowing protocol, allowing users to earn interest on deposits and borrow assets across multiple blockchains. The WELL token serves as the primary governance token, enabling holders to vote on critical protocol upgrades and risk parameters. The move to a deflationary model, driven by increased buybacks, seeks to enhance the token's economic base and incentivize long-term participation within the Moonwell ecosystem.