What happens if bad debt accumulates on a particular lending market?

1 replies, 1351 views, 1 likes

governance.aave.com

TL;DR:

The discussion, initiated by Jullian0701, focuses on the potential risks to aToken prices, AAVE stakers, and other tokens due to bad debt accumulation from exploits or liquidation slippage, and the need for a new insurance protocol. EzR3aL suggested using the forum's search function or reading through the forum for examples and solutions, specifically mentioning CRV as a potential example.

The discussion primarily revolves around the potential impact on aToken prices, AAVE stakers, and other tokens in the event of bad debt accumulation due to an exploit or slippage during liquidations. This topic was initiated by Jullian0701, who is in the process of brainstorming a new type of insurance protocol. The concern raised is of significant importance as it could potentially affect the stability and value of these tokens.

In response to this, EzR3aL provided a practical suggestion to use the forum's search function or to read through the forum to find examples and solutions. They specifically mentioned CRV as a potential example to look into. This advice could be beneficial for Jullian0701 and others interested in the topic, as it may provide insights into how similar situations have been handled in the past.

In conclusion, the discussion is centered around the potential risks associated with aToken prices, AAVE stakers, and other tokens, and the need for a new type of insurance protocol to mitigate these risks. The community is actively engaged in finding solutions and examples to address these concerns.

Posted 10 months ago

Last reply 10 months ago

Summary updated 2 months ago

Last updated 06/12 00:43