# Workflow of Culture Protocol

&#x20;A general workflow of the protocol involving smart contracts:

1. _Loan Origination_:
   * Borrowers interested in funding their projects through Culture Protocol submit loan requests, specifying the desired loan amount, terms, and collateral options.
   * The Loan Contract is triggered upon loan request submission, creating a new loan agreement and recording the borrower's terms.
2. _Project Submission and Assessment_:
   * Loan proposal submits to the trusted On- chain Due Diligence firms(3rd party) for due diligence assessment. These proposals may include details about the project's objectives, financial projections, impact metrics, legal & regulation aspects..
3. _Due Diligence Process_:
   * Due Diligence firms conducts a thorough due diligence process, assessing the viability and impact of the proposed projects. This process may involve analyzing financial data, conducting risk assessments, and evaluating the project's alignment with sustainability goals and assign the credit rating scores to those projects.
4. _Project Listing on Culture Protocol_:
   * Projects assessed and approved by 3rd party Due diligence service provider are listed on Culture Protocol's platform, showcasing key details such as project objectives, Credit rating score, funding requirements, and collateral options.
5. _Investor Participation_:
   * Investors on Culture Protocol review the listed projects and choose to participate by providing funds for lending. They may select projects based on their Credit rating scores, investment preferences, and risk tolerance.
6. _Funding the Loan_:
   * Investors fund the loan by transferring funds to the Loan Contract. These funds are then disbursed after escrow to the borrower upon successful completion of the funding process.
7. _Loan Repayment_:
   * Borrowers begin making periodic repayments according to the agreed-upon repayment schedule. Repayments are automatically recorded and updated in the Loan Contract.
8. _Collateral Management_:
   * If collateral is required for the loan, the Collateral Management Contract monitors the value of the provided collateral assets in real-time. It ensures that the collateralization ratio remains sustainable to mitigate risks for investors.
9. _Loan Performance and Liquidation_:
   * Throughout the loan duration, Culture Protocol's smart contracts continuously monitor the loan's performance and collateralization status. If a borrower defaults on repayments or if the collateral value falls below predefined thresholds, the smart contracts may trigger risk mitigation measures.
   * In cases of default or insufficient collateralization, the smart contracts may initiate liquidation events. During a liquidation event, collateral assets are automatically sold, and the proceeds are used to repay the outstanding loan balance, protecting investors' interests.
10. _Borrower Progress and Reporting_:
    * Borrowers provide regular updates on the progress of their projects to Culture Protocol. These updates may include milestones achieved, impact metrics, and financial performance.
    * Culture Protocol's platform facilitates transparent communication between borrowers and investors, enabling stakeholders to track project progress and performance in real-time.
11. _Project Completion and Exit_:
    * Once a project is successfully completed, borrowers repay the remaining outstanding loan balance to investors, including any accrued interest.
    * Investors receive their principal and interest repayments directly to their designated accounts or wallets, facilitated by Culture Protocol's smart contracts.&#x20;
