The Curve team proposes establishing a special fund pool to address bad debts in the CRV-long LlamaLend market.

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BlockBeats News, April 27 — The Curve team has proposed a recovery plan for approximately $700k in bad debt in the CRV-long LlamaLend market. The proposal introduces a market-based recovery mechanism that establishes a special liquidity pool, allowing participants to exchange vault tokens in a structure similar to “option yields” to absorb bad debt risk in a market-oriented manner. This scheme requires no permission or OTC agreements, and any user can participate; Curve DAO can choose to participate but it is not mandatory.

The mechanism design is based on LlamaLend’s liquidation logic: if the CRV price rises, the bad debt position may be gradually repaired through de-liquidation and forced liquidation, restoring users’ withdrawal ability; if the CRV price falls, the collateral assets have been converted into crvUSD, and the risk will not further escalate. The proposers stated that if this mechanism operates successfully, it could be extended to other similar bad debt scenarios within Curve in the future.

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