Curve Founder Highlights Risks in Non-Isolated Lending Models

Curve founder Michael Egorov has expressed concerns over the recent attack on Kelp DAO, which resulted in losses of approximately $292 million and led to bad debt formation on Aave. According to Foresight News, Egorov attributes these issues to the prevalent use of non-isolated lending models, which, while offering good scalability, come with higher risks. He emphasizes the importance of risk management in such models. Egorov suggests that adopting a fully isolated model, similar to Curve Finance's market, or a hybrid model, though complex, could mitigate these risks. However, he notes that the market has yet to fully understand the advantages of these approaches. The Hub and Spoke model of Aave v4 is seen as a potential step towards a semi-isolated and safer direction.