51% Attacks

The 51% Takeover is a governance-level mechanism that allows a majority stakeholder to transition a Real-World Asset (RWA) from Collaterize-managed custody to their own private or third-party custody.

To trigger a physical reclamation, a user must aggregate 51% or more of the total token supply of a specific collectible.

Eligibility & Requirements

• Verified Profile: Users must have completed the Full In-App KYC process.

• Jurisdictional Compliance: This feature is strictly disabled for users residing in sanctioned countries or restricted jurisdictions.

• Asset Type: Currently, the protocol is exclusively available for Collectibles (Art, Watches, etc.) and DATs.

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The Step-by-Step Process

1	KYC Verification	User completes identity verification in the Collaterize App. The system performs AML/Sanction checks to authorize the Collaterize App Identity for physical reclamation.
2	DAO Notification	The reclaimer needs to posts a "Takeover Notice" on Realms using the template. This links the Solana address to the verified Collaterize App Identity.
3	Custody Transition	The user sends 51% of the token supply from their Solana Wallet to the Treasury Escrow address: 1ZrGvN2jgy5bYoA9YWve647nSN6ieptSqEfWCCicCTo. This stake is held in escrow until shipping and insurance settlements are finalized.
5	Settlement	The reclaimer pays the calculated Shipping & Insurance fees via the app. If fees are not settled within the window, the 51% stake is returned to the user.
6	Physical Release	The asset is shipped via a secure courier. The reclaimer is notified via App/Email.

Custody Transition & Counterparty Risk

The 51% threshold creates a unique incentive loop for the remaining 49%. Whether the reclaimer executes a rapid takeover or a DCA, the approach toward majority control generates a natural liquidity window for fractional holders to exit into the reclaimer’s mounting demand. Post-reclamation, physical responsibility shifts from Collaterize vaults to the new owner's private custody. Since the protocol no longer secures the asset, the collateral backing risk transfers to this third-party reclaimer. The market will naturally price this shift (likely trading the remaining tokens at a discount) creating a reputation-based arbitrage. We encourage the community to trade with caution and demand regular proof of ownership directly from the new custodian, as the asset is now subject to sovereign counterparty risk.

Fail-Safe & Reversibility

If the reclaimer fails to pay the required shipping and insurance fees within the designated window (14 days), or if the shipping destination is found to be legally unreachable, the 51% stake is returned to the user’s wallet, and the asset remains in Collaterize custody.