# FAQ

### GENERAL

**What is Arenas?**

Arenas is a decentralised liquidity protocol deployed on different networks. It enables users to supply digital assets to earn interest, and to borrow against their collateral in a transparent, non-custodial way.

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**How do I interact with Arenas?**

You can connect your self-custodial wallet (such as MetaMask or WalletConnect) to the Arenas app, choose an asset, and supply or borrow directly through smart contracts.

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**Do I need a wallet to interact with Arenas?**

Yes. Arenas is fully non-custodial - all actions (supply, withdraw, borrow, repay) happen directly from your wallet.

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**What is the cost of interacting with Arenas?**

You pay standard network gas fees and, if borrowing, interest on the borrowed amount. There are no Arenas platform fees for normal lending operations.

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**How can I access Arenas?**

Arenas is available through the Arenas App or any integrated dApp that interacts with the Arenas smart contracts.

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**How can I try out Arenas without using actual funds?**

You can connect to the Arenas Testnet, where test tokens can be obtained from a faucet to simulate supplying and borrowing.

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**Can funds be frozen?**

No. Arenas is non-custodial - only you have control of your assets. However, withdrawals can be temporarily limited if the liquidity pool is fully utilised (i.e., most assets are borrowed).

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**Why do I need to approve tokens?**

Before interacting with Arenas, you must approve the protocol’s contracts to access specific tokens. This is a standard ERC-20 requirement for all DeFi protocols.

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### RISK

**What are the risks involved in using** Arenas**?**

Main risks include smart contract vulnerabilities, oracle errors, and extreme market volatility that may lead to liquidations.

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**What steps are taken to mitigate risks?**

Arenas contracts are externally audited, use Chainlink oracles for price data, and rely on over-collateralisation to ensure solvency. Parameters such as loan-to-value (LTV) and liquidation thresholds are monitored and can be adjusted by protocol administrators.

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### SUPPLYING & EARNING

**How do I supply?**

Connect your wallet, select an asset, and click “Supply.” Your tokens are deposited into the liquidity pool and you receive aTokens that represent your position and accrue interest.

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**How much can I earn?**

Earnings depend on market conditions - specifically the utilisation rate (how much of a pool is borrowed). The higher the borrowing demand, the higher the supply rate.

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**Are there limitations to supply?**

Some reserves have supply caps to control liquidity risk.

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**Where are supplied tokens stored?**

Supplied tokens are held by Arenas smart contracts on the blockchain. You receive aTokens in your wallet representing your share.

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**How do I withdraw?**

Click “Withdraw” in the Arenas app. You can withdraw your supplied tokens (plus accrued interest) provided enough liquidity is available.

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**Can I opt-out of my asset being used as collateral?**

Yes. You can disable “Use as Collateral” in the UI. The asset will continue earning interest but will not back any borrow positions.

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### BORROWING

**How do I borrow?**

Supply collateral, enable it as collateral, and select the asset you wish to borrow. Borrowing requires over-collateralisation.

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**How much can I borrow?**

Your borrow limit is defined by the LTV ratio of your supplied assets. For example, an asset with a 75% LTV allows borrowing up to 75% of its value.

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**Why would I borrow instead of selling my assets?**

Borrowing allows you to access liquidity while keeping exposure to your existing tokens (e.g., ETH, WSOMI).

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**How do I repay my borrow position?**

You can repay any time using the borrowed asset or, in some cases, directly with your collateral via adapter contracts.

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**How much would I pay in interest?**

Interest rates change dynamically based on pool utilisation. You can view current rates in the Arenas app.

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**When do I need to pay back the borrow position?**

There is no fixed repayment date - positions remain open as long as the Health Factor stays above the liquidation threshold.

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### LIQUIDATIONS

**What is Health Factor?**

Health Factor measures how safe your borrow position is. If it drops below 1, part of your collateral can be liquidated.

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**What happens when my Health Factor is reduced?**

If your Health Factor falls below the liquidation threshold, a portion of your collateral may be sold to repay your debt.

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**What are liquidations?**

A mechanism that maintains the protocol’s solvency by selling under-collateralised positions.

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**How much is the liquidation penalty?**

A small percentage (defined per reserve) is added on top of the repaid amount during liquidation.

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**Can you give an example?**

If you borrowed 100 USDC against collateral worth $150, and its value dropped so your Health Factor fell below 1, part of your collateral would be sold to cover the 100 USDC plus the liquidation penalty.

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**What is a good Health Factor?**

A value above 2 is considered safe. Closer to 1 means higher liquidation risk.

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**How can I avoid getting liquidated?**

Monitor your Health Factor and maintain extra collateral, especially during high volatility.

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