Curve Finance introduced an on-chain bad debt recovery mechanism for affected CRV users in some lending markets and described it as a framework that turns CRV-linked bad debt into tradable on-chain claims through crvUSD-debt pools. According to the project, users can choose among three routes: sell their claims, hold them for potential recovery, or provide liquidity through a pool pairing crvUSD with impaired debt tokens. Curve said the mechanism was introduced after a sharp market crash and does not guarantee recovery, with outcomes dependent on how distressed debt is resolved. Model data cited by the project suggests partial recovery near $0.957 and modeled full repair near $1.242. The framework is designed to create a market-based path for handling bad debt on-chain rather than relying on socialized bailouts, and Curve added that veCRV incentives may support the mechanism.