# Bad Debt ## For The Blue-Chip Pools If there is a bad debt situation, part of the funds of Kyoko's Treasury will be used to repay the bad debts of the Blue-Chip Pools. Once the Blue-Chip NFT in the Blue-Chip Pools is liquidated and no one participates in the bidding in the auction process, the Kyoko Treasury will hold the bottom of this debt, using treasury funds as the Grant Fund to bid this Blue-Chip NFT. Treasury income mainly comes from interest. ## For Shared Pools Pools‘ original liquidity will be used to repay the bad debts of the Shared Pool. Once the NFT in those Pools should be liquidated but no one participates in the bidding process, the Pools' liquidity will hold the bottom of this debt, using liquidity funds to repay the loss of principal and interest of debt NFT. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.kyoko.finance/how-it-works/peer-to-pool-nft-lending-platform/pending-liquidation/bad-debt.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.