liquidate() and declareInsolvent()
At Debt DAO we take a bespoke approach and don’t want automatic liquidations. We believe in a process for restructuring debt or in giving borrowers time to top up collateral or add additional revenue streams to the Spigot (which might be timelocked for example).
The Arbiter is responsible for initiating and executing liquidations.
This privileged function can only be executed when the loan status is liquidatable, triggered for example when the escrowed token collateral account becomes undercollateralized (relative to the collateral ratio set for the loan) or when a Borrower fails to repay before term ends.
The Arbiter can also take custody of collateral to execute OTC trades to repay the loan on behalf of the Borrower. The Arbiter can get better trade execution terms than an individual Borrower could otherwise achieve for the large sums expected.
The Arbiter can signify that a Borrower is incapable of repaying debt permanently after an attempt to liquidate the Borrower's collateral and/or claim as many Revenue Tokens from the Spigot as feasible.
Last modified 2mo ago