Default

First Loss Capital Providers can default previously borrowed loans if the loan in question qualifies for a default.

Defaulting a loan will burn an amount of the First Loss Capital Provider’s Pool Tokens in the Lending Pool equivalent to the loss amount from the default. If the First Loss Capital Provider’s stake does not cover the loss the Pool funds will be reduced, with the excess loss being distributed proportionally across the Lenders’ positions. See Pool Tokens for more details on Pool Tokens.