The Curve Team has proposed a recovery plan for the bad debt in the CRV-long LlamaLend market. Following the event on October 10, 2025, this market developed a collateral shortfall of approximately 70% and a funding gap of around $700,000. The plan proposes establishing a special Curve stableswap pool that allows redemption of vault tokens, thereby introducing market-based capital to facilitate recovery without requiring permission or off-chain agreements. Under the proposal, if the price of CRV rises, the bad debt positions can be gradually recovered through de-liquidation and hard liquidation; if CRV declines, the collateralization level of vault deposits will not deteriorate further. michwill also requests that the Curve DAO approve a gauge for this pool and retain management fees received in the form of vault tokens.
Curve Proposes Special Pool to Recover CRV-Long LlamaLend Market Bad Debt
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Summary
Curve has proposed a specialized stableswap pool to recover bad debt from the CRV-long LlamaLend market, which holds $700,000 in losses from 70% collateralized positions following an incident on October 10, 2025. The plan leverages on-chain data to drive recovery, allowing participants to contribute funds without requiring off-chain agreements. If CRV prices rise, liquidations can reduce bad debt; if prices fall, treasury collateral remains stable. The team has also requested Curve DAO to approve the Gauge and retain management fees in treasury tokens. This development positions Curve among the altcoins to watch amid ongoing recovery initiatives.
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