Borrowing

Vaulted Watch

A Vaulted Watch is a physical watch that has been inspected, authenticated, photographed, and securely stored in one of our insured vaults for the purpose of being used as collateral. The watch backs the loan that the borrower initiates. If a borrower defaults on the loan by failing to repay the principal and accrued interest, the NFT is seized and auctioned off, with the proceeds first going to repay our lenders their principal and interest. The remaining proceeds will go back to the borrower.

To reiterate, each Watch-backed NFT token is directly linked to a specific watch, establishing a legally binding relationship between the NFT and the physical watch (akin to an entity for the purposes of this article).

By holding a Watch-backed NFT, you are the beneficial owner of the physical watch and are granted full ownership rights.

Specifics of the Relationship:

• Beneficial Ownership: A beneficial owner is a person or entity that has ultimate ownership or control of the physical watch, either directly or indirectly.

• Transfers: Transfers of the Watch-backed NFT constitute a full transfer and assignment of beneficial ownership and control of the watch.

• Restrictions: The Watch-backed NFT must first be burned before transferring the physical watch, to prevent "double spending" or uncollateralized borrowing.

• Termination: Watches.io does not have the ability to burn Watch-backed NFTs that are not in our possession. Watches.io does not have the ability to transfer the Watch-backed NFT if it is not in our possession either.