PANews|Apr 27, 2026 01:37
[Curve Team Proposes Recovery Plan for Approximately $700,000 Bad Debt in CRV-long LlamaLend Market]
The Curve team has published a proposal on the governance forum to address approximately $700,000 in bad debt incurred in the CRV-long LlamaLend market on October 10, 2025. The proposal introduces a free-market-based recovery mechanism leveraging the option-like characteristics of CRV-long vault assets: the vault's asset value increases when the CRV price rises, while it does not further depreciate when the price falls.
The proposal suggests establishing a Curve stable pool with a low amplification factor (A=2) and a high exchange fee (1%), concentrating the liquidity of the vault tokens around a solvency level of approximately 71%. Arbitrageurs can profit by using flash loans to purchase vault tokens and partially liquidate them. Curve DAO is invited to approve incentives for this pool, with the management fees collected to be retained in the treasury in the form of vault tokens.
If this mechanism proves successful, it could serve as a reference solution for similar situations in the future.
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