Asset Recovery

In MORE Markets, asset recovery refers to the sequence of events initiated by liquidations of premium borrowers. Asset recovery is at the core of sustainable on-chain credit markets. The processes it encompasses lay the groundwork for bridging the gap between DeFi and TradFi, and are what make MORE Markets unique.

Because asset recovery may depend on off-chain processes that rely on governmental, judicial and legal frameworks, the MORE Foundation is mandated to pursue judicial recourse and/or negotiate debt collection with borrowers.

In order for premium borrowers to access the protocol and benefit from higher LLTVs in premium MORE markets, they must enter into a contract with the Foundation, the Credit Attestation Service and other relevant service providers. These contracts outline the terms that govern liquidations, defaults, debt, fees and the recovery process. The content of this contract will be made available to users through this documentation in short order.

The Debt & Debt Tokens section addresses the on-chain mechanisms that enable accounting for debt, distributing debt and claiming recovered assets. This section offers additional visibility into the off-chain processes that connect with and facilitate the on-chain debt mechanics provided by MORE Markets. It serves as a transparent and complete summary of the contents of the contract between the protocol and the borrowers who engage with it.

Grace Period

Immediately after a liquidation, and in parallel to the debt issuance facility described in detail in Debt & Debt Tokens, premium borrowers in liquidation are afforded a 48-hour grace period. During this time, they are able to freely return assets to lenders without coercion and may regain access to the protocol's markets.

The grace period commences immediately after the liquidation of a premium borrower's collateral. The grace period ends either:

• 48 hours later,

• or when the total amount deposited to the asset recovery address equals or exceeds the outstanding recoverable debt amount including any interest that may have accrued during the grace period.

As noted in the Premium Loan Liquidation Penalty section, during the grace period, the outstanding debt accrues interest at a premium to the prevailing market interest rate.

At the outset of the grace period, both the Foundation and the Credit Attestation Service will instruct a debt collector to send certified letters and emails to the responsible parties, notifying them of the liquidation and highlighting the contractual terms to which they have agreed. These communications request immediate repayment of the debt, interest and any fees that have resulted from the liquidation event.

Recourse for Borrowers

During the grace period, borrowers may reach out to the Foundation in order to seek resolution or a modification in the terms of their debt and/or the interest charged during and after the grace period. The Foundation's primary goal is to make lenders whole and will always strive for such an outcome.

If a premium borrower can provide reasonable cause for the liquidation and propose a reasonable course of action resulting in the restitution of assets owed to lenders, they may lobby the MORE Markets DAO to vote on a modification of the terms of their debt. Their request must be formalized and published to the governance platform and may consist of and may not be limited to:

• a reduction or forgiveness of interest,

• a reduction or forgiveness of premium loan liquidation fees,

• an extension of the grace period,

• a repayment schedule,

• or a reduction or forgiveness of the debt principal basis.

Legal Recourse

In some cases, a borrower may not respond to a certified letter, ignore the grace period, be unable to pay or be unwilling to pay. In such situations, the Foundation and Credit Attestation Service can instruct a debt collector to initiate the asset recovery process. Before proceeding with legal recourse and the nomination of a debt collector, a cost analysis will be conducted by the Foundation in collaboration with its legal counsel.

If the debt collection operation is determined to be feasible and no external debt collector needs to be nominated, the Credit Attestation Service will liaise directly with the borrower. If this approach is effective, the Credit Attestation Service will retain 5% of the Premium Loan Liquidation Fee, while the remainder will be returned to lenders upon recovery of the assets.

If an external debt collector is nominated, they will generally mandate that a portion of the recovered debt be withheld as a fee for the recovery service. Generally, these fees can vary between 5% and 30% of the recovered amount. If such a scenario presents itself, a formal proposal will be made to the DAO. If the DAO accepts the proposal, the DAO will instruct the Foundation to engage the debt collector who will pursue the recovery.

Last Resort

However, if the proposal fails to pass, a subsequent proposal requesting to sell the debt to a third party,may be submitted to the DAO. If the proposal passes, the debt will be auctioned wholesale or sold if a buyer presents themselves.

In this most extreme case, lenders may lobby the DAO through an additional proposal requesting that some or all of the debt be reimbursed from protocol fees over a predefined period of time or directly from the DAO treasury.