> For the complete documentation index, see [llms.txt](https://faqs.ajna.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://faqs.ajna.finance/faqs/reserve-auctions.md).
# Reserve Auctions
[What are reserves?](#what-are-reserves)\
[What are claimable reserves?](#what-are-claimable-reserves)\
[What is Net Interest Margin?](#what-is-net-interest-margin)\
[What is a reserve auction?](#what-is-a-reserve-auction)\
[When do reserve auctions occur?](#when-do-reserve-auctions-occur)\
[Who triggers reserve auctions, is there an incentive?](#who-triggers-reserve-auctions-is-there-an-incentive)\
[How do I participate in a reserve auction?](#how-do-i-participate-in-a-reserve-auction)
### What are reserves?
Reserves are a balance of funds that are collected from [Origination Fees](https://faqs.ajna.finance/getting-started/glossary#origination-fee), [Net Interest Margin](https://faqs.ajna.finance/getting-started/glossary#net-interest-margin-nim) and Penalties. Each pool has a reserve, denominated in the pool's quote token. Reserves act as backup funds for covering bad debt and are also used for buying and burning AJNA tokens through reserve auctions.
### What are claimable reserves?
Claimable reserves are a portion of a pool's reserves that are eligible to be claimed through a reserve auction. For a comprehensive breakdown see section 9.1 in the [whitepaper](https://www.ajna.finance/whitepaper).
Formula to calculate a pool's claimable reserves
### What is Net Interest Margin?
Net Interest Margin(NIM) is a portion of the interest revenue that goes to the pool's reserves and is used to provide a liquidity cushion to lenders and absorb bad debt if some should occur. The NIM is approximately 10% of the interest rate revenue.
### What is a reserve auction?
A reserve auction is a sale of claimable reserves for AJNA tokens through a dutch auction. The bidder receives quote tokens, while the protocol receives and burns the AJNA.
### When do reserve auctions occur?
Reserve auctions occur when enough claimable reserves accumulate such that the person triggering the reserve auction makes more money than the transaction costs. Reserve auctions can occur at a maximum of once every two weeks per pool.
### Who triggers reserve auctions, is there an incentive?
Anyone can trigger a reserve auction and the incentive is to purchase the reserves at a discount to market, making a profit on the spread.
### How do I participate in a reserve auction?
Through your interface of choice.
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