What is the proposal about?

The proposal would address about US$98 million in bad debt held by Aave (CRYPTO:AAVE).

Who supports the proposal?

Stani Kulechov, the founder of Aave, said he supports the proposal.

Bad debt refers to loans that cannot be fully recovered after collateral has been liquidated.

Has the proposal been approved?

No. The proposal must still be approved through Aave's governance process.

Why is the proposal important?

Supporters said removing the legacy debt could strengthen Aave's financial position and improve the protocol's balance sheet.

Image for illustrative purposes only. Not a real photo.

Aave founder backs US$98M market cleanup

Written by Liezl GambePublished Jul 31, 2026, 7:15 AM

Aave founder Stani Kulechov has backed a US$98 million proposal to address bad debt in the protocol.
The proposal aims to improve Aave's balance sheet by dealing with legacy debt from past market events.
The plan still requires community approval before it can be implemented.

Aave (CRYPTO:AAVE) founder Stani Kulechov has supported a proposal to address about US$98 million in bad debt held by the decentralised lending protocol.

The proposal aims to remove legacy debt that accumulated during previous market disruptions and strengthen Aave's financial position.

The proposal would use funds from the protocol's treasury to cover the outstanding bad debt if it receives approval from the Aave community.

Supporters said the plan would improve the protocol's balance sheet, while the final decision will be made through Aave's governance process.

Aave is a decentralised finance protocol that allows users to lend and borrow cryptocurrencies without using traditional financial institutions.

The proposal highlights how decentralised autonomous organisations continue to use on-chain governance to manage protocol finances and respond to losses from past market events.

At the time of reporting, Aave price was $98.91.