Curve Finance launches market-based tool to trade CRV-linked bad debt, replacing bailouts with market pricing.

Curve Finance introduced a new mechanism that turns CRV-linked bad debt into tradable onchain claims via crvUSD–debt pools. This allows users with impaired lending positions to sell their claims, hold for recovery, or provide liquidity to earn fees and incentives. The system creates a market-driven approach where traders and liquidity providers price bad debt, offering an immediate exit option instead of waiting for liquidation. While it doesn't erase losses, it shifts recovery from socialized bailouts to market mechanisms, potentially serving as a model for other DeFi protocols facing similar issues.