Curve Finance has proposed a recovery strategy to address the bad debt in the CRV-long LlamaLend market, which suffered a collateral shortfall of about 70% and a funding gap of $700,000 following an event on October 10, 2025. The plan involves creating a special Curve stableswap pool to enable the redemption of vault tokens, introducing market-based capital for recovery without needing off-chain agreements. The proposal outlines that if the CRV price increases, the bad debt positions can be gradually resolved through de-liquidation and hard liquidation processes. Conversely, if CRV prices fall, the collateralization level of vault deposits will remain stable. Additionally, Curve DAO's approval is sought for a gauge on this pool, with management fees to be retained in vault tokens.
Curve Proposes Special Pool to Address CRV-Long LlamaLend Bad Debt
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