> For the complete documentation index, see [llms.txt](https://constant-finance.gitbook.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://constant-finance.gitbook.io/docs/introduction/concepts.md).

# Concepts

Constant Finance separates a loan into three distinct stages: signed intent, borrower debt, and supplier claims. Understanding that separation makes the rest of the protocol much easier to follow.

```mermaid
flowchart LR
    O[Orders<br/>signed intent] --> S[Atomic settlement]
    S --> P[Position<br/>borrower debt]
    S --> N[Constant NFTs<br/>supplier claims]
    P --> R[Repayment or refinance]
    P --> Q[Liquidation when eligible]
    R --> N
    Q --> N
```

## Before Settlement

Borrowers and suppliers describe the terms they are willing to accept through signed Orders. These Orders can be discovered and combined offchain, but they do not create debt, transfer collateral, or lock supplier assets on their own.

## At Settlement

Once compatible Orders are submitted, the Gateway checks their signatures, expiry, assets, amounts, rates, term, available capacity, collateral, and initial Position health.

Settlement is atomic. The required transfers and Position creation either complete together or do not happen at all.

## After Settlement

The new onchain objects serve different purposes:

* The **Position** holds the borrower's collateral and records the debt and risk state.
* Each **Constant NFT** represents one supplier fill and gives its current owner the right to claim settled principal and interest.
* Repayment, refinance, and liquidation update the Position and fund supplier claims without changing the terms fixed at origination.

## Reading Guide

1. Begin with [Design Philosophy](/docs/introduction/concepts/design-philosophy.md) to understand isolated Positions, Just-in-Time liquidity, and flexible duration.
2. Continue to [Orders and Matching](/docs/introduction/concepts/orders-and-matching.md) to see how signed intent becomes an active loan.
3. Read [Positions](/docs/introduction/concepts/positions.md) and [Constant NFT](/docs/introduction/concepts/constant-nft.md) for the borrower and supplier sides of that loan.
4. Use [Repayment and FIFO Settlement](/docs/introduction/concepts/repayment-and-fifo-settlement.md) to understand how borrower payments become supplier claims.
5. Read [Refinance](/docs/introduction/concepts/refinance.md) to see how new fixed terms replace an old loan without editing it in place.
6. Finish with [Risk Parameters and Position Health](/docs/introduction/concepts/risk-parameters-and-position-health.md) and [Liquidations](/docs/introduction/concepts/liquidations.md) for the protocol's safety and recovery boundaries.