Default is an exceptional status, resulting in the immediate auction of the pool's debt positions (rTokens). Bidders may be either persons or organizations, but they must be whitelisted; this is accomplished by disclosing the Ultimate Beneficial Owner of the bid and by offering KYC information. Please reach out using our communication channels if you wish to be whitelisted.
The borrower in the pool is not allowed to take part in the auction. The minimum bid at the auction must be more than the insurance amount (see below). The auction will run for 336 hours.
At the end of the auction, there will be a vote procedure where all holders of rTokens will have the chance to approve or disapprove the winning bid:
- If the majority decides to reject the bid: holders will be able to redeem the tokens for their share of the pool insurance; they'll also keep the rights to legally pursue the defaulted borrower individually.
- If the majority decides to accept the bid: holders will be able to redeem the tokens for their share of the winning bid; they will cede the legal authority to pursue the defaulted borrower to the successful bidder.
Upon acceptance of the bid, the successful bidder will be given an NFT containing the legal rights to the debt, as well as the sole legal authority to pursue the defaulted borrower.