Curve introduces a "bad debt" recovery mechanism, allowing affected creditors to exit through trading or participate in remediation.

Curve Finance has announced the introduction of a "bad debt" recovery mechanism based on an on-chain market mechanism. This mechanism allows CRV users who have experienced bad debts in certain lending markets to choose different recovery strategies: directly selling their claims to exit, continuing to hold and waiting for potential repairs, or providing liquidity to earn fees and incentives. The core of this mechanism is the establishment of a trading pool between crvUSD and the tokens representing the bad debts, allowing bad debt claims to be priced in the market and generate liquidity, thus providing users with an immediate exit channel, rather than relying solely on the final liquidation result. It is understood that after the crypto market crash last October, some of Curve Finance's lending markets experienced bad debt issues. Various liquidity pools were impacted by sharp price fluctuations and liquidity contractions, resulting in some depositors facing withdrawal restrictions and asset losses. Curve stated that the recovery mechanism does not eliminate losses or guarantee recovery, but rather gradually reflects risk and repair expectations through market mechanisms. Furthermore, if the governance layer distributes rewards through the veCRV incentive mechanism, it will help improve liquidity depth, improve exit conditions, and enhance market pricing efficiency.