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

Wondering the impact on aToken prices, AAVE stakers, and any other tokens impacted. The scenario is bad debt for a particular collateral accumulates due to an exploit or slippage during liquidations.

Context is I am brainstorming a new type of insurance protocol

Hi, if you read through the forum or use the search function you will find some examples and what happened and how it got solved. Example i am talking about is CRV.

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