> 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/v0/overview.md).

# Overview

Constant Finance is a non-custodial, peer-to-peer lending protocol built around a simple promise: **Fixed Rate, Flexible Duration**.

Borrowers and suppliers sign the terms they are willing to accept offchain. When those terms are compatible, Constant Finance validates the Orders and settles the match onchain in a single transaction. The result is an isolated **Position** for the borrower and one or more transferable **Constant NFTs** for the suppliers.

The Position holds the collateral and records the debt. Each Constant NFT represents a supplier's claim on principal and funded interest.

{% hint style="info" %}
**Non-custodial does not mean that collateral stays in the borrower's wallet after settlement.** Once a Position opens, its collateral is held by the Position contract and can move only according to the protocol's onchain rules.
{% endhint %}

## Why Constant Finance

Constant Finance combines three properties that are often separated in onchain credit markets:

* **Fixed rate:** borrower and supplier unit rates are set when the Position opens, so the price of the loan does not change with a variable-rate pool.
* **Flexible duration:** the Position has a fixed maturity, but the borrower may repay early and pays interest only while principal remains outstanding.
* **Just-in-Time liquidity:** supplier assets remain in the supplier's wallet until an Order is matched and settled.

This design gives borrowers predictable pricing while preserving the option to repay early. Suppliers receive a known unit rate, while accepting that early repayment may shorten the realized lending period and reduce total interest.

If a borrower later wants a different rate, maturity, or collateral arrangement, the original agreement is not edited. Instead, refinancing settles the old Position and opens a new one atomically.

## Who Uses the Protocol

| Participant              | Role in the protocol                                 | What they receive                                  | Main responsibility                                                         |
| ------------------------ | ---------------------------------------------------- | -------------------------------------------------- | --------------------------------------------------------------------------- |
| Borrower                 | Signs borrowing terms and provides collateral        | Borrowed assets at a fixed rate and fixed maturity | Keep the Position sufficiently collateralized and repay the debt            |
| Supplier                 | Signs supply terms and provides assets at settlement | A transferable Constant NFT claim                  | Keep enough balance and Gateway approval available until settlement         |
| Matcher                  | Finds and combines compatible Orders offchain        | A combination ready for onchain validation         | Keep every fill within the limits signed by both sides                      |
| Create Position Executor | Submits a matched set of Orders onchain              | Atomic validation and Position creation            | Submit combinations that remain executable under current onchain conditions |
| Liquidator               | Repays debt for an eligible Position                 | Collateral permitted by the liquidation rules      | Return enough debt assets to satisfy the Position's final checks            |
| Constant NFT holder      | Owns a supplier claim                                | Claimable principal and funded interest            | Claim settled funds from the Constant NFT escrow                            |

## The Protocol at a Glance

```mermaid
flowchart LR
    SO[Supplier<br/>Supply Orders] --> M[Match]
    BO[Borrower<br/>Borrow Order] --> M
    M --> G[Gateway<br/>validation and settlement]
    G --> P[Position<br/>debt and collateral]
    G --> N[Constant NFTs<br/>supplier claims]
    P --> L[Repay, refinance,<br/>or liquidate]
    L --> N
```

Before settlement, Orders are signed instructions—not deposits or active loans. At settlement, the Gateway verifies the terms, transfers the required assets, creates the Position, and mints a Constant NFT for every non-zero supplier fill. If any required check or transfer fails, the whole transaction reverts.

## Key Terms

| Term                     | Category                   | Plain-English definition                                                                                                              | Key boundary                                                                                     |
| ------------------------ | -------------------------- | ------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------ |
| Borrower                 | Participant                | The account that signs borrowing terms, provides collateral, and owes the Position debt.                                              | The borrower controls the loan request but cannot rewrite settled supplier claims.               |
| Supplier                 | Participant                | The account that signs an offer to provide a debt asset under specified terms.                                                        | Signing an Order does not deposit or lock funds.                                                 |
| Matcher                  | Participant                | An offchain service or actor that finds compatible borrower and supplier Orders.                                                      | A matcher can combine Orders but cannot change their signed limits.                              |
| Create Position Executor | Participant                | An authorized account that submits matched Orders to the Gateway.                                                                     | Permission to submit does not bypass signature, balance, approval, collateral, or health checks. |
| Liquidator               | Participant                | An external actor that settles debt for a Position that is unhealthy or past maturity.                                                | The liquidator must satisfy the Position's liquidation limits and repayment checks.              |
| Order                    | Pre-settlement object      | A signed authorization that describes acceptable transaction terms.                                                                   | An Order creates neither debt nor a claim until settlement succeeds.                             |
| Supply Order             | Pre-settlement object      | A supplier's offer covering an asset, available capacity, minimum rate, term, expiry, and owner.                                      | Order capacity, wallet balance, and token approval are separate states.                          |
| Borrow Order             | Pre-settlement object      | A borrower's request covering the debt asset, amount, rate, term, expiry, collateral, owner, and fee field.                           | The requested loan exists only after a successful onchain match.                                 |
| Refinancing Order        | Pre-settlement object      | A borrower's request to replace an existing Position with a new one under new terms.                                                  | It does not modify the old Position in place.                                                    |
| Match                    | Settlement concept         | A compatible combination of one Borrow Order and one or more Supply Orders.                                                           | Offchain compatibility does not guarantee execution if onchain conditions change.                |
| Fill                     | Settlement concept         | The portion of a Supply Order used in a particular match.                                                                             | A partial fill consumes only the corresponding part of the signed capacity.                      |
| Just-in-Time liquidity   | Design concept             | Supplier assets are transferred only when a match is executed.                                                                        | Funds can be used elsewhere before settlement, so balance or approval may become insufficient.   |
| Gateway                  | Protocol entry             | The onchain entry point that verifies requests and routes active protocol operations.                                                 | The current Sepolia Gateway exposes the Basic and Refinance paths described in this guide.       |
| Router                   | Protocol component         | A module behind the Gateway that implements a product flow.                                                                           | A Router contains execution logic; it is not the permanent loan record.                          |
| Position Builder         | Protocol component         | The factory that creates isolated Positions and their supplier claims.                                                                | Changing its default Config affects future Positions, not existing ones.                         |
| Config                   | Protocol component         | The fixed set of collateral, liquidation, and fee parameters bound to a Position when it is created.                                  | Positions created at different times may use different Config addresses.                         |
| Oracle                   | Protocol dependency        | The price system used to value debt assets, ERC-20 collateral, and supported LP NFT collateral.                                       | Oracle quality and configuration directly affect Position health.                                |
| Position                 | Post-settlement object     | An isolated contract that holds collateral and records one borrower's debt, maturity, rates, risk configuration, and lifecycle state. | Its accounting does not merge with another Position.                                             |
| Basic Position           | User-facing position label | A Position opened through the standard Supply Order and Borrow Order flow.                                                            | It describes how the Position was opened, not a separate Position contract type.                 |
| Refinanced Position      | User-facing position label | The new Position created while an old Position is settled atomically.                                                                 | It uses the same core Position model as a Basic Position.                                        |
| Constant NFT             | Post-settlement object     | A transferable supplier claim created for one non-zero supply fill.                                                                   | It is a claim on debt repayment, not ownership of borrower collateral.                           |
| Collateral               | Risk object                | ERC-20 assets or supported Uniswap V3 LP NFTs locked in a Position to secure its debt.                                                | Collateral can be removed only when the Position rules allow it.                                 |
| Debt asset               | Accounting object          | A token borrowed by the borrower and owed by the Position.                                                                            | Debt value includes remaining principal and accrued borrower interest.                           |
| Debt bucket              | Accounting object          | The Position's combined accounting for one debt asset.                                                                                | Several Constant NFTs may share the same debt bucket.                                            |
| Borrower rate            | Pricing term               | The fixed unit rate used to calculate borrower interest for a debt asset.                                                             | The rate is fixed, but total interest still depends on time and outstanding principal.           |
| Supplier rate            | Pricing term               | The fixed unit rate used to calculate supplier interest after the protocol spread.                                                    | It is different from the borrower rate.                                                          |
| Maturity                 | Lifecycle term             | The final timestamp agreed when the Position opens.                                                                                   | Maturity does not erase unpaid debt; debt remaining afterward makes the Position liquidatable.   |
| Repayment escrow         | Settlement object          | Funds recorded for Constant NFT holders after a borrower repayment.                                                                   | The funds reach a holder's wallet only after a claim.                                            |
| Claim                    | Settlement action          | The action that pays available escrowed principal and interest to the current Constant NFT owner.                                     | The caller cannot redirect the payment to another account.                                       |
| FIFO principal repayment | Accounting rule            | Principal is returned to Constant NFTs in the order they were minted.                                                                 | FIFO changes supplier repayment timing, not the borrower's total principal reduction.            |
| Position health          | Risk concept               | The relationship between current debt value and the risk-adjusted value of collateral.                                                | Health changes with prices, accrued interest, repayments, and collateral changes.                |
| LTV                      | Risk parameter             | A stored collateral ratio intended to describe an opening-borrow boundary.                                                            | The current Position path does not enforce it as a separate opening limit.                       |
| Liquidation threshold    | Risk parameter             | The share of collateral value that supports debt before a Position becomes unhealthy.                                                 | The effective threshold is weighted across all collateral in the Position.                       |
| Liquidation bonus        | Risk parameter             | Additional collateral value permitted as compensation for a liquidator.                                                               | It is not interest paid to suppliers.                                                            |
| Protocol fee rate        | Pricing parameter          | The share of the borrower unit rate retained as protocol spread.                                                                      | It is not a standalone annual borrowing rate.                                                    |
| Refinance                | Lifecycle action           | The atomic settlement of an old Position and origination of a new one under newly signed terms.                                       | Old and new claims remain separate.                                                              |
| Liquidation              | Lifecycle action           | Permissionless debt settlement in exchange for eligible collateral after a Position becomes liquidatable.                             | The Position performs the final eligibility, collateral, and repayment checks.                   |

## Where to Go Next

* Continue to [Concepts](/docs/v0/concepts.md) to follow the full loan lifecycle.
* Visit [Ethereum Sepolia](/docs/v0/deployment/ethereum-sepolia.md) for the current public testnet deployment.
* Review [Risk Configuration](/docs/v0/deployment/risk-configuration.md) for the parameters applied to new Sepolia Positions.


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