> 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/protocol.md).

# Arenas Protocol

The **Arenas Protocol** is the credit engine behind every financing market. It defines the on-chain building blocks — markets, pools, obligations and roles — and the standard lifecycle a financing goes through, from request to repayment. As a depositor you work with a pool; the protocol enforces the rules underneath it, including the ones that govern when your capital can be lent.

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### What it is

Arenas is a **configurable, credit-based financing engine**. Instead of the overcollateralized, auto-liquidating model of typical money markets, it implements **approval-gated, undercollateralized credit**: liquidity providers fund pools, borrowers request financing, a permissioned approver signs off, and repayment is governed by an off-chain legal agreement rather than a collateral ratio.

Each market is configured for a specific real-world program (for example `Brazil – Coffee – USDC`). All markets share the same engine, so they behave consistently and stay within the same protocol-level limits.

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### The liquidity side (depositors)

As a depositor you interact with the **pool adapter**, not the borrower flow:

* **Deposit** — approve the asset token and `deposit` into the pool to receive pool shares that accrue interest as borrowers repay. See [Deposit](/financing-markets/supply.md).
* **Withdraw** — withdrawals are a **two-step, delayed** process: `createWithdrawRequest`, then `executeWithdrawRequest` after the pool’s `withdrawDelay`. If liquidity is locked in active obligations, a request may be fulfilled proportionally. See [Withdraw](/financing-markets/withdraw.md).

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### Core building blocks

| Component                         | What it is                                                                                                                                                                 |
| --------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| **FinancingMarket**               | The market contract. Holds the borrower request/approval/draw-down/repayment logic and routes funds to and from pools.                                                     |
| **FinancingMarketAdapter (pool)** | The liquidity pool (pool-v2). Depositors (LPs) deposit the asset token and receive pool shares; the adapter supplies capital to the market when a financing is drawn down. |
| **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.    |
| **Obligations**                   | On-chain accounting of what a borrower owes: principal, interest, and other obligations, tracked per financing.                                                            |

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### The financing lifecycle

Your capital is lent through a fixed sequence of on-chain steps. Each step maps to a role and a market-contract call:

1. **Request** — the borrower calls `requestFinancing` (interest accrues over time) or `requestFixedFinancing` (a fixed repayment amount). Requests can be revised (`modifyRequest`) or withdrawn (`closeRequest`). No token approval is needed — eligibility is the access-token NFT.
2. **Review** — an **Approver** reviews the pending request and either `approveRequest` (optionally for a **partial** amount) or `declineRequest`. Approval does **not** move any funds.
3. **Draw down** — the borrower calls `receiveFinancing` to disburse an approved request. Liquidity is sourced from one or more pools by passing **lender intents** (packed `address+id` tranches) **sorted by rate ascending**, so the cheapest capital fills first. The recipient address can differ from the borrower’s wallet. Fills can be partial if pool capacity is short.
4. **Repay** — anyone (not only the borrower) can repay at any time: `repay` for a full payoff, or the fine-grained `payInterest` / `repayPrincipal` / `payOtherObligations`. Loans are effectively open-ended; repayment is enforced by the signed agreement, not by an on-chain health factor.

There is **no collateral-based liquidation**. Instead, a non-performing obligation is recovered through the off-chain agreement, with the recovered amount paid back directly to the affected pool’s depositors.

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### Roles

* **Depositor (LP)** — supplies capital to pools and earns interest and incentives.
* **Market Operator** — configures the market within protocol limits and (absent a separate approver) reviews requests; earns a share of interest as a market fee.
* **Approver** — the permissioned role that approves or declines financing requests.
* **Borrower** — holds the access token, creates requests, draws down, and repays.
* **Curator** — arranges liquidity and pool relationships for a market.

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### What the protocol guarantees

Whatever a specific market configures, the protocol ensures that:

* All markets follow the same **request → approve → draw down → repay** lifecycle.
* Fees and permissions stay within predefined protocol **limits**.
* Liquidity, disbursement and repayment use the same **standardized engine and accounting**.
* Only allowlisted addresses can deploy new markets on a product.

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### Supported networks

Arenas markets are deployed on **Somnia**:

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