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'Degrading state' refers to the state of a dungeon, after it has already been fully conquered by a raiding party.
In the degrading state, a dungeon starts to slowly degrade into nothingness and disappear. It generally takes a month before the whole Dungeon disappears and the dungeon entrance closes forever.
During this 'Degrading State' the residual mana and life forces in the dungeon condense and generate various treasures, like mana stones, potions, weapons, artifacts, etc.
The alliance sends a professional 'Clean-up team' whose duty is to collect and transport as many rewards from the dungeon as possible before it disappears.
The raiding party can choose what to do with the treasure on their own.
Generally, most raiding parties sell these treasures directly to the alliance and receive payment in their bank accounts.