In the unlikely event that the loans do not produce the minimum expected profitability, the Smart Contract of the loan would automatically liquidate the Ethix necessary from the Compensation System, allocating them to investors affected by said abnormality.
- Hub of Loan Originator in EthicHub will be required to immobilize Ethix in the defined volumes, in addition to approving the due diligence of a specialized committee that validates the ability to meet the new demand for loans, the risk of the same loans, and the positive impact for small farmers. The Ethix of the Originating Hubs remains in the guarantee of their projects. In case of a non-payment, they are the first to be liquidated to compensate the affected lenders.
- The Compensation Reserve -When immobilizing the Ethix is not enough, a Smart Contract will ask the global Compensation Reserve to sell Ethix in exchange for DAI until the expected profitability is covered.
- Ethix staked by holders- Ethix holders can also help mitigate ecosystem risks byimmobilizing Ethix, which will act as a third level of guarantee in the unlikely event if the Ethix from The originating Hub added to the Ethix from the compensation reserve were not enough to cover the default. At this third level, liquidity providers can also be counted within the pool of decentralized exchange houses ( with EthicHub/ stable cryptocurrenct pairs) that may choose to be part of the compensation system if they decide to immobilize their position within the pool in (EThix and Dai ), and receive in exchange the same benefits from those who participate in the third level of compensation ( in addition to the benefits they receive for being liquidity providers per se)
- The Ethix / Dai pool The liquidity providers within the pools of decentralized Exchange Houses (with EthicHub / stable Cryptocurrency pairs), may choose to be part of the Compensation system at a fourth level. If they decide to immobilize their positions within the pool (in Ethix and Dai) and receive in exchange the same benefits from those who participate in the third level of compensation (in addition to the benefits they receive for being liquidity providers per se).