Curve founder proposes market-based model to recover DeFi bad debts

According to Odaily, Curve founder Michael Egorov has proposed recovering bad debts in lending protocols by converting impaired positions into tradable investment products. The solution is piloted on Curve's own CRV-long LlamaLend market, which generated approximately $700,000 in bad debt in October 2025. Michael Egorov has established a Curve Stableswap pool with approximately 71% solvency to allow trading of impaired vault tokens. Traders can buy at a discount, liquidity providers can earn fees, and the DAO can accumulate impaired tokens through management fees. The community's feedback on the proposal is mixed, with some users questioning whether impaired positions lacking immediate returns can attract buyers.