# Defaults and Impairments

Defaults and impairments are inherent risks within any credit system and are addressed within Quantix through a structured and transparent framework.

A default is defined as the failure of a borrower to meet repayment obligations in accordance with agreed terms. An impairment may be identified when there is a measurable deterioration in the borrower’s financial position or strategy performance that materially increases the probability of default.

Quantix employs a multi-layered approach to managing these events:

#### **Monitoring and Early Detection**

Borrower positions are continuously monitored using both on-chain data and off-chain intelligence. This includes:

* Collateral levels and margin ratios (where applicable)
* Strategy performance and volatility exposure
* Liquidity conditions impacting borrower operations

Early warning indicators allow for proactive identification of stress scenarios before they evolve into full default events.

#### **Intervention and Mitigation**

Where risk thresholds are breached or impairment is identified, Quantix may initiate intervention measures, including:

* Adjustment of exposure or allocation limits
* Requests for additional collateral or margin
* Restructuring of repayment terms

These actions are designed to preserve capital and stabilize positions where feasible.

#### **Default Resolution**

In the event of default, resolution mechanisms may include:

* Liquidation of collateral (if applicable)
* Recovery processes through structured agreements
* Redistribution of remaining assets within the pool

Losses, where incurred, are allocated according to pool structure and participation terms.

Quantix prioritizes risk visibility and structured response, ensuring that lenders are informed of developments and that credit events are managed within a defined framework rather than ad hoc processes.