Account Settlement

Overview

The Settlement functions handle the maturation of positions in Tenor markets. It supports two primary settlement flows:

1. Standard Tenor Position settlement
2. Settlement of borrowers with matured debts to Morpho, if applicable

Standard Tenor Position Settlement

Function

function settle(
    MarketContext memory marketContext, 
    address account,
    AccountState storage accountState
) internal

Settlement Process

1. Maturity Processing Order

• Maturities are sorted in ascending order
• Processes: zeroes → matured positions → future positions
• Ensures fixed assets are processed before debts

3. Asset Settlement Flow

   • Processes limit orders first
   • Converts withdrawn assets to appropriate tokens
   • Updates account balances

4. Fixed Token Settlement

   • Converts positive fixed balances to loan tokens
   • Updates final balances

5. Debt Settlement Flow

   • Settles negative fixed balances using available loan tokens
   • Updates account state accordingly

Morpho Settlement

Function

function settleToMorpho(
    IMorpho morpho,
    IProxyMorphoAccountFactory proxyMorphoAccountFactory,
    MarketContext memory marketContext,
    Seconds maturity,
    address account
) internal returns (
    uint256 loanRepaid,
    uint256 debtSettled,
    uint256 collateralSettled
)

Settlement to Morpho Process

1. Eligibility Checks

• The borrower has matured debts after the normal settlement process
• The Loan Token has negative sharesBackingExcess ≥ to the amount to be settled to Morpho.

2. Collateral Calculation

• Calculates the amount of collateral to be transfered to Morpho to repay the net matured debt
• Maintains same LTV ratio across the Morpho account and Tenor

3. Proxy Account Management

• Creates or retrieves user's proxy account
• Handles Morpho authorizations

4. Position Migration

• Transfers collateral to Morpho
• Creates equivalent borrowing position
• Sends the borrowed funds on Morpho as Loan Tokens in the borrower's account