Collaterized default

Marked as defaulted (but still repaying the loan): If a DAO marks a loan as defaulted, it can still be repaid. Marking a loan as in default triggers an event that records the default in the blockchain. In the case of collateralized loan the collateral goes to the Mini-DAO vault. While it is in the Mini-DAO, the loan still it can be fully repaid after that which automatically changes the loan status to ‘Fully repaid’.

Marked as resolved: If the loan is marked as defaulted AND the borrower never repays the loan by normal means, but instead negotiates an agreement with the DAO, the loan can be marked as ‘Resolved’. (Usually because loan resolution has has been negotiated by both parties by external means). Note: For collateralized loans, in default the collateral stays in the Mini-DAO wallet. Transferring the collateral to the main DAO treasury would require a vote.