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

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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

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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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