Withdrawal Approval Flow

This diagram shows the three-step approval-based withdrawal process when requireApprovalForWithdrawals = true.

Process Overview

This flow only applies when a pool is configured to require manager approval for withdrawals. It provides better liquidity management and prevents bank-run scenarios.

Three Steps

1. Request - LP submits withdrawal request
2. Approve - Pool manager reviews and approves
3. Execute - LP executes standard ERC4626 withdraw/redeem

Key Points

• Optional Feature: Only applies when requireApprovalForWithdrawals = true
• Manager Control: Pool manager determines approval amounts
• Reserved Shares Protection: Approved shares excluded from getAvailableForBorrowing()
• Atomic Consumption: Approval consumed when withdrawal executes
• Partial Approvals: Manager can approve less than requested

Reserved Shares

When shares are approved for withdrawal, they are tracked in totalReservedShares. This amount is subtracted from the available capital for borrowing:

function getAvailableForBorrowing() returns (uint256) {
    uint256 totalAvailable = virtualBalance;
    uint256 reserved = totalReservedShares * sharePrice;
    return totalAvailable - reserved;
}

This ensures that borrowers cannot draw funds that LPs have been approved to withdraw.

Comparison: Approval vs Instant

Feature	With Approval	Instant (No Approval)
Request needed	✅ Yes	❌ No
Manager review	✅ Yes	❌ No
Wait time	Typically the withdrawalPeriod defined in the Tranche settings	Immediate
Liquidity management	✅ Better	Basic
Bank-run protection	✅ Yes	Limited
Use case	Institutional pools	Retail/liquid pools

Related Flows

• Deposit Flow - How LPs deposit
• Architecture Overview - WithdrawalRegistry component