Curve Founder Proposes Market-Based Fix for LlamaLend’s $700,000 Bad Debt

Curve lending platform LlamaLend accumulated about $700,000 in bad debt after the DeFi market suffered 28 hacking incidents in April. Compensating affected lenders without forcing the protocol to absorb the losses is crucial to capital efficiency, risk pricing and market confidence across the Curve ecosystem.

Curve founder Michael Egorov recently proposed creating an onchain pool for discounted debt claims. Lenders could sell tokenized proofs of deposit, while buyers would acquire the $700,000 in claims at a discount and effectively make an options-like bet on a CRV recovery. The proposal extends recovery efforts following the April incidents and differs from Aave’s earlier protocol-funded bailout approach.