> For the complete documentation index, see [llms.txt](https://docs.trilobyte.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.trilobyte.finance/protocol-mechanics/vault-lifecycle.md).

# Vault Lifecycle

Every Trilobyte vault goes through a series of phases that represent the state of the loan. Transitions between phases are triggered by on-chain actions — deposits, approvals, payments, or enforcement calls.

## Phase Diagram

```
RaisingFunds ──► AwaitingApproval ──► Active ──► FullyRepaid   (loan settled · terminal)
                                        │  ↕
                                        │  Renegotiation  (⇄ Active only)
                                        ▼
                                     Defaulted             (terminal)

RaisingFunds / AwaitingApproval ──► Finalized
   (funding or approval deadline expired → investors refunded)
```

## Phases at a Glance

| Phase                | Description                                                                                                              | Who Acts                     |
| -------------------- | ------------------------------------------------------------------------------------------------------------------------ | ---------------------------- |
| **RaisingFunds**     | Vault is open for investor deposits                                                                                      | Investors                    |
| **AwaitingApproval** | Fully funded, waiting for manager to approve and disburse                                                                | Pool Manager                 |
| **Active**           | Loan is live — borrower makes payments, investors claim yield                                                            | Borrower, Investors, Manager |
| **FullyRepaid**      | Loan settled (outstanding reached zero) — investors claim remaining yield. **Terminal.**                                 | Investors, Borrower          |
| **Finalized**        | Terminal state for a vault **cancelled before disbursement** (funding or approval deadline expired) — investors refunded | —                            |
| **Renegotiation**    | Terms are being renegotiated (**from Active only**)                                                                      | Pool Manager                 |
| **Defaulted**        | Borrower failed to repay within the grace period. **Terminal** (manager collateral is slashed).                          | Anyone (trigger)             |

## Transition Rules

* **RaisingFunds → AwaitingApproval**: Automatic when total deposits equal the principal
* **RaisingFunds → Finalized**: Funding deadline expired (permissionless call)
* **AwaitingApproval → Active**: Manager calls `approve_and_disburse`
* **AwaitingApproval → Finalized**: Approval deadline expired (permissionless call)
* **Active → FullyRepaid**: Automatic when the outstanding balance reaches zero (terminal — investors claim any remaining yield here)
* **Active → Renegotiation**: Manager proposes new terms
* **Active → Defaulted**: Grace period expired after a missed payment (permissionless call; terminal)
* **Renegotiation → Active**: Manager approves the proposal (EMI recalculated) — or rejects it, which restores **Active**

*(Defaulted and FullyRepaid are terminal. Renegotiation is only reachable from — and returns to — Active; a defaulted loan cannot be renegotiated because the manager's collateral is already slashed.)*

{% hint style="info" %}
Explore each phase in detail using the sub-pages below.
{% endhint %}