When a loan tranche matures and its one-hour grace period lapses, recovery becomes permissionless. Recovery settles the expired tranche only — sibling tranches and other positions are untouched.

#When recovery opens

Recovery is available only after maturity plus one hour. Before that window, no one — including the borrower — can seize the tranche. The borrower can always repay or extend in the meantime.

#What recovery does

Recovery burns debt plus penalty shares, clears the stored principal vector, and unlocks all remaining collateral. For each constituent:

Example
burnShares      = debtShares + penaltyShares
backingRemoved  = B_i(S) - B_i(S - burnShares)
penaltyBacking  = backingRemoved - storedPrincipal
callerBounty    = floor(penaltyBacking * 2000 / 10000)   // 20%
protocolAmount  = penaltyBacking - callerBounty           // 80%

The caller bounty is paid from the penalty backing; the remaining 80% enters the ordinary global non-swap fee route (90% to eligible stakers, 10% to treasury, or 100% to treasury with no eligible stake).

#Why this never creates bad debt

Principal is bounded by the self-backed collateral vector and LTV is at most 95%, so debt plus penalty always fits inside the locked collateral. Recovery removes only the burned debt-plus-penalty shares from the basket reward denominator and preserves already-crystallized claims.

Note

Recovery is the only basket-loan path that pays a caller bounty. Other basket and liquidity maintenance (claims, LP activation, compounding, treasury distribution, ExitOnly unwind) pays no protocol bounty — its liveness depends on users, integrators, or externally motivated keepers.

#Distinct from Dollar recovery

Basket-loan recovery is separate from Statics Dollar expired-risk recovery. Basket recovery pays a fixed 20% of configured penalty backing; Dollar expired-risk recovery includes its own quoted keeper bounty in the collateral paid to its caller. The two paths must not be confused.