Withdrawal Flow

The withdrawal flow is the primary way users exit a leveraged position. It takes Position Manager shares, unwinds the underlying leverage through a series of coordinated steps, and returns USDC to the withdrawers.

Lifecycle

sequenceDiagram
    participant U as Users
    participant F as Facility (Intent)
    participant Req as Request
    participant PM as Position Manager
    participant Fund as Fund

    U->>F: 1. Deposit PM shares
    F-->>U: ERC-6909 LP tokens

    Note over F: 2. Facilitator locks intent

    F->>Req: 3. Pull bridge loan
    Req-->>F: Bridge capital (USDC)

    F->>PM: 4. Repay debt & withdraw collateral
    PM-->>F: Burn PM shares, release collateral

    F->>Fund: 5. Redeem collateral
    Note over Fund: 6. Redemption wait (days/weeks)
    Fund-->>F: 7. USDC proceeds

    F->>Req: 8. Repay bridge loan

    Note over F: 9. Intent resolved
    U->>F: Claim USDC

End-to-End Flow

1. Deposit phase — Users deposit Position Manager shares into a Facility intent and receive ERC-6909 LP tokens minted 1:1
2. Lock — The facilitator closes the deposit window and begins resolution
3. Bridge loan — The Facility pulls bridge capital (USDC) from a Request contract that has been pre-funded by a bridge facilitator
4. Position unwinding — The Facility uses the bridge capital to repay debt on the Position Manager and withdraws the freed collateral. PM shares are burned
5. Fund redemption — The Facility submits the withdrawn collateral to the Fund wrapper for redemption back into the underlying asset (e.g., USDC)
6. Redemption wait — The external protocol processes the redemption. This can take days or weeks depending on the protocol
7. Unlock — Once settled, the Fund wrapper returns USDC proceeds
8. Repayment — The USDC proceeds are used to repay the bridge loan via the Request
9. Resolution — The intent is resolved. LP token holders can now claim their pro-rata share of the remaining USDC

Bridge Loan Sizing

The bridge loan sizing follows the same logic as the deposit flow but in reverse. The amount borrowed through the Request contract depends on several factors:

• Current Position Manager LTV — if the existing PM is below its target LTV, less bridge capital is needed. The withdrawal itself will bring the LTV back up, so the protocol borrows less rather than overshooting
• Average asset yield — the expected return on the underlying RWA collateral
• Expected yield on the Request — the return demanded by the bridge facilitator for providing the loan
• Expected borrow rate — the interest rate on the Position Manager’s existing borrow positions
• Redemption duration — how long the bridge loan will be outstanding while waiting for the RWA to settle

The bridge loan is capped at (n − 1) × withdrawal where n is the target leverage — the same cap as a standalone deposit flow.

Resulting LTV

As with the deposit flow, the actual LTV after the withdrawal will fluctuate from the target. The protocol does not overshoot to compensate — if the LTV ends up above the target, it stays there until a subsequent retarget leverage flow brings it back.

In effect, the withdrawal flow nets two intents together:

• The withdrawer wants to exit their leveraged position
• The existing PM holders are currently at n × (1 − ε) leverage and want to return to nx

The withdrawal brings the existing holders closer to target while offboarding the withdrawer.