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Curve Finance Team Proposes Establishing a Special Pool to Address the CRV-long LlamaLend Market Default

2 hours ago

On April 27, the Curve team proposed a recovery plan for a ~$700k default on the CRV-long LlamaLend market. The proposal introduces a market-driven recovery mechanism featuring a special liquidity pool. Participants can swap treasury tokens in a structure similar to "option yields" to absorb default risk in a market-oriented way. No permission or off-chain agreements are required—any user can participate, and Curve DAO has the option (but not obligation) to join. The mechanism is rooted in LlamaLend’s liquidation logic: if CRV’s price rises, the default position may gradually be rectified via deleveraging and liquidation, restoring users’ withdrawal capabilities; if CRV’s price falls, collateral assets have already been converted to crvUSD, so risk won’t expand further. Proponents note that if the mechanism succeeds, it could be expanded to similar default scenarios in other Curve pools down the line.
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