Glossary
Bad Debt
Bad debt is the unpaid liability that remains after collateral liquidation fails to cover what a borrower owes, creating a loss for the system or its backstop.
Plain-English meaning
In this game, Bad Debt is used as a vocabulary card for recognizing how market and technology concepts fit together. The short idea is: shortfall left after collateral is gone.
The term is not shown as a recommendation. It is included so players can learn the language they may see in exchange interfaces, wallet prompts, research notes, AI product pages, or on-chain analytics dashboards.
Why it belongs with DeFi Risk Primitives
These concepts explain how DeFi lending systems measure collateral quality, trigger liquidations, and account for losses.
When solving the puzzle, compare the job this term performs with nearby cards. A correct group usually shares a function, risk type, workflow, or market structure rather than simply sharing similar wording.
Where you might see it
You might encounter this term while reading educational explainers, product documentation, risk disclosures, market dashboards, or beginner guides. Always separate vocabulary learning from financial decision-making.