We developed a microscopic model for antikaon absorption on two nucleons in nuclear matter. The absorption is described within a meson-exchange picture and the primary $K^-N$ interaction strength is derived from state-of-the-art chiral coupled channel meson-baryon interaction models... We took into account the medium modification of the $K^-N$ scattering amplitudes due to the Pauli correlations. We derived the $K^-NN$ as well as $K^-N$ optical potentials as functions of nuclear matter density including the real part of the $K^-NN$ potential. We calculated the $K^-$ single- and two-nucleon absorption fractions and branching ratios for various mesonic and non-mesonic channels. We confirmed the crucial role of in-medium effects in our calculations. Our results are in very good agreement with available experimental data from old bubble chamber experiments as well as with the latest results from the AMADEUS collaboration. (read more)