The Curve team proposed a recovery plan for approximately $700,000 in bad debt in the CRV-long LlamaLend market.

CoinFeed reported on April 27th that the Curve team submitted a proposal on the governance forum, proposing a free-market-based recovery mechanism to address the approximately $700,000 in bad debt generated in the CRV-long LlamaLend market on October 10, 2025. This mechanism leverages the option-like characteristics of CRV-long vault assets: the value of vault assets increases when the CRV price rises, but does not further diminish when the price falls. The proposal suggests establishing a Curve stable pool with a low leverage ratio (A=2) and a high exchange fee (1%), concentrating vault token liquidity around a solvency level of approximately 71%. Arbitrageurs can purchase vault tokens through flash loans and profit from partial liquidation. The Curve DAO has been invited to approve incentives for this pool, and the collected management fees will be retained in the vault as vault tokens. If successful, this mechanism will serve as a reference solution for similar situations.