Liquidation
The process of liquidation of assets
Last updated
The process of liquidation of assets
Last updated
The process of Liquidation of an asset, is triggered in the bad weather scenario, where the asset owner could not repay back the loan
| Step ID | Description |
|---|---|
1
Bond owner (Lender) submits the bond at maturity date
1a
Owner who borrow the money using NFT Bond contract defaults (unable to pay back the principal and interest)
2
The liquidation contract auto publishes the Bond in the NFT marketplace
3,3a
Junk Bond buyer now buys the bond from marketplace at a discount. The money given is now transferred to the original bond owner.
4
The marketplace smart contract now transfers the bond to the wallet of the Junk bond buyer.
5
Now Junk bond buyer, goes and submits this Bond to the equity Smart contract for forced liquidation of the Asset (the owner cannot object as he has defaulted).
6
At a pre-agreed rate, part of the house is liquidated (remember, that the house NFT is already locked in the Smart contract and hence this is possible)
7a
The equity tokens are transferred to the Junk Bond owner.
7b
The bond owner now has the option to put the tokens in marketplace or hold them as they will appreciate over time and in certain circumstances will also enable rental income to be acquired as passive income.
8a
The bidding marketplace attracts buyers from REIT token holders (who have contributed to liquidity pool) and these investors have now the opportunity to diversify in small amounts into real estates.
