Recovery / Liquidation
The recovery process starts whenever a loan goes into default. The recovery module steps and procedures are the following:
| Recovery Module | Duration | Description |
|---|---|---|
Grace Period | First 48 hours after default | The Borrower can avoid collateral loss by repaying the amount borrowed plus accrued interest, in addition to a penalty fee for late repayment. |
Buy Now Period | 48 hours after Grace Period ends | If no repayment is made, Lenders who have funds in the corresponding Lending Pool will have access to the “Buy Now” area and will be able to purchase the NFTs at the quoted price. |
Liquidation Period | Instant to Days, with period starting after Buy Now ends | If the defaulted NFTs are not purchased by the time the Buy Now period ends, they will be automatically sold to a 3rd party at the current market price. However, if problems like lack of counter-party liquidity or severe slippage arise, the Liquidation Period duration is extended to allow better execution. |
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