How a loss is decided

A loss is decided by one test, read off the chain: did the senior claim lose money, net of recovery. A clean default and a quiet workout both count. The one thing not on the chain is the timing, which the market flags.

One test

The test is whether the senior claim lost money on chain, net of recovery. A missed payment, a write down, and a quiet extension with a haircut all show up the same way, a number going down, and Rava reads it. There is no list of named events to argue over.

The market flags a delayed mark

The index carries a fair value anchor computed from the loan rates, and the token trades at a market price around it. If a loss is brewing, the market price drops below the anchor before any write down shows in the rates. When that gap opens past a band and someone posts a bond, that is the signal that wakes the determination panel.

The panel

A contested loss goes to a panel of parties exposed on both sides, who rule against the published rulebook, and the loser forfeits the bond. It fires only when the market and the published number disagree and someone pays to say so. Clean on chain losses settle on their own.