Default is a situation where a borrower fails to meet their obligations to pay interest or principal. If a borrower doesn’t pay for 60 days, we initiate the collateral liquidation process.
Before diving into the default process, it’s important to understand that 8lends has two types of projects — and investor protection works differently for each.
Two Types of Projects on 8lends
1. RWA-Collateralized Projects (Standard Type)
The main type of projects on the platform. Each project is backed by Real World Assets — real estate, vehicles, equipment. These projects come with a higher interest rate. If a borrower defaults, we sell the collateral assets and distribute the proceeds to investors.
Learn more about RWA projects in our article: RWA at 8lends: How Real Collateral Works
2. Buyback Projects
These projects are also backed by RWA, but have a different protection system. In case of default, you are guaranteed a return of 100% of your principal. Since the Buyback mechanism differs from standard RWA projects, we’ve dedicated a separate article to it:
The "Buyback" Badge: What Does 100% Protection of Your Investment Mean?
When Does a Default Occur?
A default is triggered automatically if a borrower fails to pay for 60 days. After that, the loan is frozen and we begin the collateral liquidation process.
Example
Let’s say a project was due to pay interest on March 1:
Steps in Handling a Late Payment
1. Notification. As soon as a payment is missed, we notify the borrower about the outstanding debt.
2. Negotiation. We look for ways to resolve the situation. The borrower can still repay the debt and avoid default.
3. Default and Liquidation. After 60 days, the loan is frozen. The sale of collateral assets begins.
4. Fund Recovery. Proceeds from the sale are distributed among investors proportionally to their investments.
Our Track Record
To date, 8lends has had zero defaults. Nevertheless, it’s important for investors to understand how our protection system is structured and what mechanisms will activate if such a situation ever occurs.
If you have any questions about defaults or investment protection — reach out to our support team.