Curve Founder Proposes Turning Bad Debt Into Tradable Investment Products - Crypto Economy
Curve founder Michael Egorov proposed a market mechanism to recover bad debt in DeFi protocols without resorting to direct bailouts.
➤ Curve founder Michael Egorov proposed a novel market mechanism to convert bad debt in DeFi protocols into tradable investment products, using the LlamaLend CRV-long market as a pilot. ➤ The proposed model transforms deteriorated positions into instruments with an option-like profile, aiming to recover collateral if asset prices rise, and potentially offering a floor if they fall. ➤ Market reception was mixed, with some users questioning the participation of sophisticated capital without immediate yield, while others saw potential in the unique yield profile of the associated liquidity pools.