> 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/key-concepts.md).

# Key Concepts

This page defines the objects and terms used throughout the docs, so the rest of the pages stay short. As a depositor, the ones you touch directly are the **pool**, **pool shares** and the **asset token**; the rest describe how your capital is lent.

***

### The building blocks

| Concept                      | What it is                                                                                                                                                                                                                                            |
| ---------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| **Financing Market**         | The market contract for one real-world program (e.g. `Brazil – Coffee – USDC`). Holds the request → approve → receive → repay logic and routes funds between borrowers and pools.                                                                     |
| **Pool (Financing adapter)** | Where you deposit. Depositors (LPs) deposit the asset token and receive **pool shares**; the pool supplies capital to the market when a borrower draws down.                                                                                          |
| **Senior / junior pool**     | A market's two repayment tranches. The **senior** pool is the on-chain Arenas pool depositors fund and is repaid first; the **junior** pool is off-chain and repaid after it. See [Financing Markets](/financing-markets.md#senior-and-junior-pools). |
| **Pool shares**              | Your claim on a pool's assets. Their value grows as borrowers pay interest and falls if loans default.                                                                                                                                                |
| **Asset token**              | The single ERC-20 a market uses for both deposits and repayment (typically a stablecoin such as USDC). You deposit and withdraw in this token.                                                                                                        |
| **Access token (NFT)**       | A borrower’s eligibility credential in a market. Owning the access token is what lets an address create requests and draw down — there is **no ERC-20 collateral** to post.                                                                           |
| **Financing request**        | A borrower’s ask: an amount, a minimum acceptable amount, a rate ceiling (or fixed repayment), and a duration. Reviewed before any money moves.                                                                                                       |
| **Financing**                | An active loan created once an approved request is drawn down. Tracks obligations until repaid.                                                                                                                                                       |
| **Obligations**              | The live on-chain accounting of what a borrower owes on a financing: **principal**, **interest**, and **other obligations**.                                                                                                                          |
| **Intent**                   | A standing liquidity offer from a pool — an amount of depositors' capital available at a given rate. Draw-downs are filled from intents, cheapest first. See [Intents & Liquidity](/intents-and-liquidity.md).                                        |

***

### Two kinds of financing

A request is created as one of two types, fixed at request time:

* **Interest-accrual** — interest accrues over time against a borrower-set **rate ceiling** (`maxRate`). Open-ended; repay principal and accrued interest whenever due.
* **Fixed-repayment** — the borrower commits to a single **fixed repayment amount** over a set **duration**, rather than an accruing rate.

***

### The lifecycle at a glance

Every financing your pool funds follows the same path. The important detail — often misunderstood — is that **approve and receive are two separate steps**, and your capital only moves on the second:

```mermaid
flowchart LR
    A[REQUESTED] -->|approver authorises amount| B[APPROVED]
    B -->|borrower draws down| C[ACTIVE / FILLED]
    C -->|repay principal + interest| D[Repaid]
    A -->|closeRequest| E[CLOSED]
    B -->|closeRequest| E
```

* The **approver** authorises an amount (possibly partial). This moves **no funds** — it opens a **timed receive window**.
* The **borrower** later **draws the money down themselves** inside that window, with liquidity auto-selected from lender intents.

See [How Your Capital Is Lent](/financing-request-lifecycle.md) for the full state machine and statuses.

***

### Undercollateralized & approval-gated

Unlike a typical money market, Arenas has **no on-chain collateral and no price-based liquidation** protecting your deposit:

* Eligibility is the **access token**, not locked collateral.
* Every draw-down requires an **approver’s** sign-off.
* Repayment is backed by an **off-chain legal agreement**, enforced off-chain.
* If a loan goes unpaid, anything recovered under the agreement is paid back to the pool’s depositors.

See [Roles & Permissions](/roles-and-permissions.md) for who can do what, and [Risks](/risks.md) for how these trade-offs are managed.

***

### Supported networks

| Network | Chain ID | Type    |
| ------- | -------- | ------- |
| Somnia  | 5031     | Mainnet |