TokenLogic’s September 11 proposal introduces an Umbrella bad-debt backstop for Aave V4, prioritizing the Aave DAO to absorb initial losses through deficit offsets before volunteer underwriters. The proposed coverage targets are 800 ETH for Core WETH, 400,000 USDC for Core USDC, and 400,000 USDT for Core USDT, sized for six to eight weeks of expected loan growth. Underwriters would face a 20-day cooldown period during which their funds remain exposed to losses while continuing to earn supply yield. Coverage is limited to the Core Hub on Ethereum, excluding deposits in other Hubs, and TokenLogic proposes a three-month monitoring period before reassessing the framework.
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