What moves, and when?
Collateral and principal move at different steps. Acceptance never moves collateral.
| Step | Who acts | Asset A (collateral) | Asset B (principal) |
|---|---|---|---|
| Propose | Borrower | Borrower → covenant (locked) | — |
| Accept | Lender | Stays locked | Lender → borrower |
| Repay | Borrower | Covenant → borrower | Borrower → lender (+ protocol fee) |
| Cancel (pending only) | Borrower | Covenant → borrower | — |
| Liquidate | Lender | Covenant → lender | Unrepaid portion stays with lender |
Memory hook
Collateral is the borrower's pledge — it moves once at propose (into the covenant), then again only at the end (back to borrower or to lender). Principal is the lender's funding — it moves only at accept and repay.