In the event of defaults or other adverse events, the interests of senior and equity tranche liquidity providers are balanced using a predefined waterfall mechanism. This ensures that losses are allocated from the equity tranche to the senior tranche, providing a level of protection to the senior tranche liquidity providers.

Furthermore the pool issuer will liquidate the pool, and the pool will terminate once the liquidation is complete, and refunds are made. Senior liquidity providers have two options: wait for the offline liquidation process to be completed and withdraw when the funds are available or apply to sell at the price set by the bid-ask system.

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