> For the complete documentation index, see [llms.txt](https://docs.arenas.fi/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.arenas.fi/atomica/atomica-faq.md). # Atomica FAQ #### How is this different from typical DeFi lending protocols like Aave? Traditional DeFi money markets are **overcollateralized**: you lock more value in collateral than you borrow, and on-chain liquidations enforce repayment.\ Arenas Financing markets are **credit-based and approval-gated**: * **No on-chain collateral**. * **Market Operator** (or **Approver**) approval is required for obligations. * Every loan is backed by a **real-world legal agreement**, not just smart-contract rules. *** #### Do I need to provide on-chain collateral to borrow? No. Borrowers **do not** post on-chain collateral.\ Instead, you: 1. Create a **financing application** and financing request. 2. Sign a **real-world financing agreement contract** off-chain. 3. Wait for **Market Operator** (or **Approver**) approval and disbursement. *** #### What happens if a borrower does not repay? Because there is no on-chain collateral to liquidate: * The protocol will show the loan as **in default** on-chain. * Recovery relies on the **off-chain enforcement** of the signed loan agreement. * Losses from defaults can affect the **value of lender LP tokens** in the affected pool. * Liquidated obligation can be sold on a secondary market at a discount and the earned amount will be refunded to the affected pool. Exact processes for handling defaults depend on the legal and operational framework of each market. *** #### Can I withdraw my funds at any time as a lender? You can **request a withdrawal at any time**, but: * Withdrawals are **subject to available liquidity** in the pool. * If much of the pool is lent out, your request may be: * **Partially fulfilled**, with the rest staying as LP tokens. * **Delayed** until more loans are repaid. The protocol always returns either assets or LP tokens; it does not “freeze” your funds without a claim. *** #### How do borrowers receive the funds? After a financing request is approved: * The executor (you or a designated address) calls the protocol to **initiate the obligation**. * The **Financing Market Adapter** sends the obligation amount to the recipient address specified in the financing request. This address can be different from the borrower’s own wallet if the deal structure requires it. *** #### How is interest for lenders generated? Lenders earn from: * **Interest payments** from borrowers on active loans. * Potential **upfront incentives** borrowers pay to attract more capital. * Optional **reward programs** funded by the protocol or third parties. All of this is reflected in the **growing value of LP tokens** over time. *** #### Who can be a Market Operator? A Market Operator is a **permissioned role** responsible for: * Reviewing financing requests if there is no separate financing Approver role. * Approving or rejecting new financing requests. * Monitoring portfolio quality and market configuration. * Making agreements with Pool Curators to attract liquidity to the market. * Support market operational activity by making control over upgradable settings. The specific criteria for who can act as a Market Operator and how they are appointed depend on the specific market and governance setup. *** #### Is yield guaranteed? No. Yield is **not guaranteed**. * If borrowers repay on time, lenders can earn **interest and rewards**. * If borrowers default, or if markets change, returns may be **lower than expected or negative**. Always evaluate the risks before supplying or borrowing. *** #### Where can I see the contract addresses? All official contract addresses are listed in the **“Deployed Contracts”** section of the docs.\ Always verify that the address you interact with matches the documented one for your network --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. 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