> 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/intents-and-liquidity.md).

# Intents & Liquidity

Your deposit is not lent out as one undifferentiated balance. The pool offers its capital to the market as **intents**: standing offers of liquidity at a specific rate. When an approved borrower draws down, the protocol fills the loan from these intents. This page explains how that matching decides when your capital is used.

***

### What an intent is

An **intent** is a pool's standing offer to lend:

| Property             | Meaning                                                             |
| -------------------- | ------------------------------------------------------------------- |
| **Source pool**      | The pool providing the capital, such as the one you deposited into. |
| **Available amount** | How much of the offer is still unfilled.                            |
| **Rate**             | The rate at which this capital is offered to borrowers.             |
| **Validity window**  | The time range during which the offer can be used.                  |

A single market can have **many intents** at different rates, from one or several pools. The pool's **Curator** arranges them, so as a depositor you don't create intents yourself.

***

### Cheapest-first filling

When a borrower draws down, the protocol fills the amount from intents **sorted by rate, ascending**. The cheapest capital is used first, then the next cheapest, until the draw-down is covered:

```mermaid
flowchart LR
    R[Draw-down: need 100k] --> S{Sort intents by rate}
    S --> I1[Intent A · 6% · 40k]
    S --> I2[Intent B · 8% · 40k]
    S --> I3[Intent C · 11% · 50k]
    I1 --> F[Fill 40k @6%]
    I2 --> F2[Fill 40k @8%]
    I3 --> F3[Fill 20k @11%]
```

* Each intent fills to capacity before the next is used.
* Filling stops once the draw-down amount is reached. Unused intents stay available for the next borrower.
* Each pool earns the rate of its own intent. The borrower pays the **blended** rate of all intents that filled the loan.

***

### What this means for you

* **Lower-rate pools are drawn first.** Their capital is used more often but earns less per loan.
* **Higher-rate pools earn more per loan** but may sit idle when cheaper capital covers demand.
* **Idle capital earns nothing from borrowers.** Pool yield depends on how much of the pool is actually lent out.

***

### Guardrails on every draw-down

| Guardrail           | Effect                                                                                                              |
| ------------------- | ------------------------------------------------------------------------------------------------------------------- |
| **Approved amount** | A draw-down can never exceed what the approver authorised.                                                          |
| **Rate ceiling**    | Intents priced above the borrower's ceiling are not used.                                                           |
| **Minimum amount**  | If the achievable fill is below the request's `minAmount`, the draw-down is rejected rather than partially settled. |
| **Validity**        | Expired or not-yet-valid intents are skipped.                                                                       |

See [How Your Capital Is Lent](/financing-request-lifecycle.md) for the full lifecycle around a draw-down.