The Asset Lifecycle

Every Gally project is a state machine. A project moves through a fixed set of states, and only the transitions drawn below are allowed — anything else is rejected by the contract. Understanding this diagram is the fastest way to understand the whole protocol, because every action belongs to exactly one state.

It starts with the Smart Trust

Before any of this, the project's Smart Trust — its legally binding, court-enforceable contract — is drafted, and a validator stakes coverage to vouch for it. The on-chain raise is the digital twin of that contract, so origination is really: draft the Smart Trust → a validator vouches it → funding opens.

The lifecycle at a glance

stateDiagram-v2
    [*] --> PENDING_VOUCH: entity drafts the Smart Trust & lists the project
    PENDING_VOUCH --> FUNDING: validator vouches the Smart Trust & locks coverage
    PENDING_VOUCH --> CANCELLED: no vouch before timeout
    FUNDING --> FUNDED: goal met before the deadline
    FUNDING --> FAILED: deadline passed, goal missed
    FAILED --> [*]: everyone refunds in full
    FUNDED --> EXECUTING: tranche engine armed (automatic)
    EXECUTING --> EXECUTING: validator-approved tranche released
    EXECUTING --> OPERATIONAL: final tranche released
    EXECUTING --> DEFAULTED: a tranche deadline is missed
    OPERATIONAL --> OPERATIONAL: revenue in · yield claimed · wrap/unwrap
    OPERATIONAL --> CLOSED: term complete / wind-down
    DEFAULTED --> COMPENSATING: collateral + escrow + coverage seized
    COMPENSATING --> CLOSED: funds swept, redemptions open

Each state, in plain words

• PENDING_VOUCH — the entity has drafted the Smart Trust and listed the project (its goal, tranche schedule, revenue split, and its own collateral — all mirroring the legal contract), but no validator has vouched yet. Nobody can contribute. If no validator vouches within a timeout, the listing can be cancelled and the entity's collateral returned.
• FUNDING — a validator has vouched and locked coverage; the raise is open. Investors contribute USDC and receive soulbound receipts. This continues until the goal is met or the deadline passes.
• FAILED — the deadline passed without hitting the goal. The raise is dead and every contributor can refund their full principal. This is the all-or-nothing guarantee.
• FUNDED → EXECUTING — the goal was met and the raise finalized. The funds stay in escrow and are released tranche-by-tranche: the entity submits proof, a validator approves it, then the entity withdraws that tranche. Releasing the final tranche flips the project to operational.
• OPERATIONAL — the project is live and earning. Revenue is deposited (by anyone), the investors' cut flows into the yield index, and holders claim yield, sell deeds, or wrap/unwrap at will.
• DEFAULTED → COMPENSATING — a tranche deadline was missed. Anyone can flag it; the project's collateral, undeployed escrow, and the validator's coverage (if a related dispute was upheld) are seized into a compensation pool, distributed to holders after a grace window.
• CLOSED — the terminal state. A project closes when a term-financing target is reached, after compensation is fully distributed, or via an agreed wind-down. Deeds can still be redeemed and any final yield claimed.
• CANCELLED — a listing that was never vouched and timed out; collateral returns to the entity.

"Where is my money, and how do I get out?"

The single most important property of the lifecycle is that every state holding your money has a permissionless exit that is never pausable.

The only state with no exit is EXECUTING, and that is intentional: the money is doing the real-world work it was raised for. Your protection there is not an exit button — it is the validator's slashable coverage and the entity's collateral standing behind the project. See Trust & Security for why that is enough.