Thanks @LlamaRisk for taking the time on this. The actor diagram and the asymmetric-information concern are useful additions, and the safeguards make sense.
A couple of points from a lenders’ standpoint, where the proposal as it stands still leaves the hardest question unanswered.
On the framing in the conclusion
“Permissionless deployment, therefore not a DAO matter” reads cleaner than it actually is for this market. CRV-long had a live gauge in the GaugeController and was receiving CRV emissions through DAO weight-votes for a long stretch — that is endorsement, not silence. The wind-down itself was direct DAO action through Vote #1391 (https://prices.curve.finance/v1/dao/proposals/details/ownership/1391). The DAO has a precedent for treating endorsement-via-gauge as inside the responsibility line — Vyper #521 dealt with permissionlessly-deployed pools and the DAO still acted (https://gov.curve.fi/t/proposal-to-recompensate-lps-affected-by-curve-pool-exploit/9825).
The point isn’t to relitigate that classification. It’s that “permissionless” by itself isn’t doing the work the conclusion is asking it to do.
On the part the current proposal doesn’t solve
The mechanism is elegant in shape, but it depends on counterparty depth showing up. Today the pool is essentially empty. Without depth, “exit at the floor” exists on paper but not in practice — and the borrower-arbitrage concern you raised becomes moot in the same way, because nothing can actually be arbitraged at this size.
The follow-up question is what closes that gap, and it is the question affected lenders care about most.
One option that fits the “discretionary, not obligatory” framing cleanly: the DAO itself provides liquidity to the recovery pool. Not as a backstop, not as a grant. As an LP. Sized flexibly, scaled in stages, conditional on observed recovery progress, parked alongside the admin-fee accrual the OP already proposes. The Treasury and execution primitives for this are already in place — Vote #1381 used the same calldata pattern earlier this month.
This is the structural answer the design needs, and it doesn’t ask the DAO to take on a permanent obligation. It is treasury allocation against an investment with a defined payoff envelope, and it can be wound down at any time.
Why this matters for the thread
The risk of leaving the depth question implicit is that lender exits become contingent on counterparties that may simply not arrive. From a lenders’ perspective the worst outcome is not a discount — it’s a recovery mechanism that exists in design but never reaches working scale, and the bad debt becomes a quiet permanent line item.
Happy to help draft the technical side of a DAO-LP proposal — sizing model, calldata, gauge weight ask — if there is interest in moving that direction.