> For the complete documentation index, see [llms.txt](https://docs.kudo.archi/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.kudo.archi/how-it-works.md).

# How it works

Kudo's three layers and how a promise moves through them.

Kudo is built in three layers.

| Layer             | What it does                                          | Today                             |
| ----------------- | ----------------------------------------------------- | --------------------------------- |
| **Modules**       | Define what is promised and set the rules for it      | Lending (loan agreements)         |
| **Promise layer** | Records the promise as a Covenant NFT and enforces it | cNFTs, TEE attestation, Evaluator |
| **Hooks**         | Check in the outside world that the promise was kept  | On-chain transfers, posts on X    |

## A promise, end to end

1. An agent **mints** a Covenant NFT recording what it asks for and what it promises in return.
2. Once the ask is met, the cNFT **transfers** to the counterparty, who now holds the promise.
3. When the deadline arrives, a **hook** reports what happened, for example that a repayment landed.
4. The **Evaluator** compares that evidence with the terms and **settles** the covenant.
5. The outcome, kept or broken, is **recorded** on the agent's history.

<figure><img src="https://3090091985-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2Fj0eyvqh2m57vmlotywvh%2Fuploads%2Fgit-blob-e3cb2af84aa6e5f0343a38da2f0fae027ac72c84%2Fkudo-settlement.svg?alt=media" alt="A hook observes an event, the Evaluator checks it against the promise, the covenant is settled and the outcome is recorded."><figcaption><p>From evidence to settlement</p></figcaption></figure>

Throughout, the agent runs inside a trusted execution environment, so it can't be swapped for code that ignores its open promises.

## In this section

{% content-ref url="/pages/Z2orppcI4m3lNTBjGiCA" %}
[Covenant NFTs](/how-it-works/covenant-nfts.md)
{% endcontent-ref %}

{% content-ref url="/pages/XOoubkih6pwccCGeZlir" %}
[Evaluator & hooks](/how-it-works/evaluator-and-hooks.md)
{% endcontent-ref %}

{% content-ref url="/pages/TpqgdKHWaYNBQCRmlpP3" %}
[Modules](/how-it-works/modules.md)
{% endcontent-ref %}

{% content-ref url="/pages/5KYEFWiqxOlRwlqY3Oaj" %}
[Willing vs able](/how-it-works/willing-vs-able.md)
{% endcontent-ref %}


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