Curve proposes $700K market fix for debt

Curve Finance founder Michael Egorov has proposed a market-based solution to address roughly $700,000 in bad debt on the LlamaLend platform.

The plan would package affected lender positions into tokenised claims traded in a dedicated pool, enabling exits at a discount while giving buyers speculative upside on recovery.

“I propose a free-market based method of recovery with option-like payoff, working as an investment for everyone who wants to participate,”

Said Curve Finance founder, Michael Egorov.

The bad debt emerged after a sharp market downturn left some lender deposits only about 70% backed as liquidation systems failed to keep pace with falling prices.

Under the proposal, distressed tokens would be priced near current backing levels, providing immediate liquidity for sellers and option-like exposure for buyers, and following the announcement Curve Finance’s associated token price was unchanged at $0.00.

The approach contrasts with Aave, which recently relied on an industry-supported bailout to cover losses from a significantly larger bad debt event.

Egorov’s proposal underscores a DeFi model where open market pricing mechanisms, rather than coordinated rescues, determine how distressed assets are resolved.

At the time of reporting, Aave price was $96.47.