# Overview

#### Supply – Earn Yield <a href="#supply-earn-and-collateralize" id="supply-earn-and-collateralize"></a>

Supplying assets to Arenas allows users to earn interest by providing liquidity to a perpetual financing pool. When an asset is supplied, the deposit is sent to the financing pool, which mints interest-bearing LP tokens representing the lender’s share of the pool. These LP tokens track the growing claim on the underlying assets as borrowers pay interest into the pool.\
Also a pool can offer different reward programs to attract more capital.&#x20;

Withdrawing is the process of redeeming LP tokens for the underlying asset, including any accrued yield. Withdrawals are only possible if there is sufficient unborrowed liquidity in the pool. When liquidity is partially locked in active obligations, withdrawal requests may be fulfilled proportionally: the share that can be redeemed is paid out in financing pool assets and the corresponding LP tokens amount is burned, while any remaining LP tokens are returned to the LP until more liquidity becomes available.

#### Borrow – Managed, Approval-Gated Credit <a href="#borrow-manage-exposure" id="borrow-manage-exposure"></a>

Borrowing on Arenas enables users to access liquidity without posting on-chain collateral. Instead of automatic, collateral-based borrowing, a borrower first creates a financing application (apply for financing obligation)  and a financing request. The borrower signs a real-world loan agreement off-chain, confirming they accept the contractual rules.&#x20;

A designated Financing Market Manager (or a separate role of Financing Approver) reviews the request, and only upon explicit approval can the obligation be executed and funds sent from the financing pool to the specified recipient address.

Repayment of borrowed assets (principal and interest) can be done at any time by any user (not limited to the borrower account), and the loan positions are effectively open-ended, governed by the off-chain contract rather than on-chain collateral ratios or health factors.&#x20;

There is no on-chain liquidation mechanism based on collateral value; instead, risk is managed through Market Manager (or Approver) approvals, pool configuration, potential lender incentives, and the enforceability of the signed real-world loan agreement.\
Additionally, the obligations of a non repaid (or partially repaid) financing can be sold on-chain on a secondary market for further collection off-chain, while the sold obligation gets liquidated on-chain in Arenas system. LPs will receive the refund from the sold obligation directly.


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