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+# ADR 0003: Transaction Lifecycle Architecture
+
+- **Status:** Accepted
+- **Date:** 2026-07-22
+- **Deciders:** PocketPay SDK maintainers
+- **Type:** Documentation / Architecture
+
+## Context
+
+The PocketPay SDK submits transactions to two distinct Stellar backends:
+Horizon (classic payments) and Soroban RPC (smart-contract vault
+operations). Each backend has different preparation, submission, and
+confirmation semantics. Without a single reference document, these
+differences risk being understood only by whoever last touched the code,
+making review and onboarding harder.
+
+This ADR records the current transaction lifecycle for both paths, the
+retry and polling assumptions baked into each, and the security boundaries
+between the SDK and the consuming application. It is purely descriptive;
+it proposes no new behavior.
+
+## Decision
+
+### Lifecycle stages
+
+Every write operation in the SDK follows the same five-stage pipeline.
+The details differ between Horizon and Soroban, but the shape is
+consistent.
+
+#### Stage 1 — Preflight validation
+
+All user-supplied inputs are validated synchronously before any network
+call is made. This includes public-key format, secret-key format, amount
+syntax, memo length, self-payment checks, and contract-ID presence.
+
+Invalid inputs throw `PocketPayError` with a machine-readable code
+(e.g. `INVALID_PUBLIC_KEY`, `INVALID_AMOUNT`, `SELF_PAYMENT`) and are
+never sent over the wire.
+
+**Files:** `src/utils/index.ts` (validation functions), beginning of each
+public function in `src/payments/index.ts` and `src/soroban/index.ts`.
+
+#### Stage 2 — Configuration resolution and server construction
+
+`resolveConfig(overrides?)` merges explicit overrides, environment
+variables, and built-in defaults (Testnet endpoints, 30 000 ms timeout)
+into a fully validated `SDKConfig`. A Horizon `Server` or
+`SorobanRpc.Server` is then constructed from the resolved URL.
+
+**Files:** `src/config/index.ts`.
+
+#### Stage 3 — Account state fetch
+
+The source account's current sequence number and state are loaded from
+the network. This is a read-only call that anchors the transaction to a
+specific ledger snapshot.
+
+- **Horizon path:** `server.loadAccount(publicKey)` returns a
+  `StellarSDK.Account` usable with `TransactionBuilder`.
+- **Soroban path:** `sorobanServer.getAccount(publicKey)` returns a
+  Soroban-aware account object.
+
+Both calls are wrapped in `withTimeout()` using the resolved timeout.
+
+#### Stage 4 — Transaction construction, signing, and (for Soroban) simulation
+
+**Horizon payments (`sendXLM`):**
+
+1. A `TransactionBuilder` is created with `BASE_FEE` and the network
+   passphrase.
+2. A `payment` operation (native XLM) is added; an optional memo is
+   attached.
+3. `setTimeout(30)` is set on the builder so the transaction expires if
+   not included within 30 seconds of ledger close.
+4. The transaction is built and signed with the source `Keypair`.
+
+**Soroban vault operations (`depositToVault`, `withdrawFromVault`,
+`getVaultBalance`):**
+
+1. A `TransactionBuilder` is created with `BASE_FEE` and the network
+   passphrase.
+2. A `contract.call(...)` operation is added with the appropriate
+   Soroban-scVal arguments (public key as `address`, amount as `i128`).
+3. `setTimeout(30)` is set.
+4. The transaction is built (but **not** signed yet).
+5. The transaction is **simulated** via
+   `sorobanServer.simulateTransaction(tx)`.
+6. If simulation returns an error, a `VaultResult` with `success: false`
+   is returned immediately — no submission occurs.
+7. If simulation succeeds, `rpc.assembleTransaction(tx, simulated).build()`
+   produces a prepared transaction with the correct resource fees and
+   Soroban footprint baked in.
+8. The prepared transaction is signed with the source `Keypair`.
+
+The simulate-then-assemble pattern is required by Soroban: the runtime
+must evaluate the contract to determine CPU/memory resource consumption
+before the transaction can be priced and submitted.
+
+#### Stage 5 — Submission and confirmation
+
+**Horizon payments (`sendXLM`):**
+
+`server.submitTransaction(transaction)` sends the signed transaction
+to Horizon. On success the response is mapped to a `PaymentResult` with
+`hash`, `ledger`, `fee`, and `createdAt`.
+
+On failure, the error is classified:
+
+| Horizon condition | SDK error code | Behavior |
+|---|---|---|
+| HTTP 404 | `ACCOUNT_NOT_FOUND` | Thrown immediately |
+| `result_codes.transaction` present | `PAYMENT_FAILED` | Thrown with result code |
+| Other / network error | `SEND_ERROR` | Wrapped via `wrapError` |
+
+**Idempotent submission (`submitTransactionIdempotently`):**
+
+The SDK also exports an idempotent submission helper for callers who
+need stronger delivery guarantees. It wraps `server.submitTransaction`
+and, when the initial attempt returns a status-unknown error (timeout or
+network failure), enters a polling loop:
+
+1. The transaction hash is extracted from the signed transaction.
+2. `pollTransactionStatus` queries Horizon for the transaction record.
+3. Polling continues at 2-second intervals for up to 10 attempts (or
+   until the transaction's `timeBounds.maxTime` is exceeded, whichever
+   comes first).
+4. If the transaction is found, the record is returned (confirming it
+   was eventually included).
+5. If the transaction expires on-chain, `TX_EXPIRED` is thrown.
+6. If polling exhausts all attempts without resolution,
+   `TX_STATUS_UNKNOWN` (HTTP 504) is thrown.
+
+**Soroban vault operations:**
+
+`sorobanServer.sendTransaction(prepared)` submits the prepared
+transaction. If the send itself returns `status: 'ERROR'`, a
+`VaultResult` with `success: false` is returned immediately.
+
+Otherwise, the SDK enters a polling loop:
+
+1. `sorobanServer.getTransaction(hash)` is called.
+2. While the status is `NOT_FOUND`, the SDK waits 1 second and retries.
+3. Once the status is no longer `NOT_FOUND`, the loop exits.
+4. `SUCCESS` returns `{ success: true, hash }`.
+5. Any other final status returns `{ success: false, error }`.
+
+There is no maximum poll count on the Soroban path — the loop continues
+until the transaction reaches a terminal state. The 30-second
+`setTimeout` on the transaction itself provides the ultimate bound: if
+the transaction is not included within that window, the Stellar network
+rejects it.
+
+### Timeout strategy
+
+Every network call in the SDK is wrapped in `withTimeout(operation, timeoutMs, promise)`.
+
+- Default timeout: 30 000 ms (configurable via `SDKConfig.timeout` or
+  `STELLAR_TIMEOUT` env var).
+- On timeout, the promise rejects with `PocketPayError` code
+  `REQUEST_TIMEOUT`.
+- The timeout is enforced via `Promise.race` against a timer; the timer
+  is cleaned up in a `finally` block regardless of which side wins.
+- For `fetch`-based calls (e.g. Friendbot), `fetchWithTimeout` uses
+  `AbortController` when available, falling back to the same `Promise.race`
+  strategy on older runtimes.
+
+Timeouts are per-request, not cumulative. A Soroban vault deposit that
+requires simulation + submission + polling may incur multiple independent
+timeouts across those steps.
+
+### Error model
+
+All errors bubble up as `PocketPayError` instances with a stable
+machine-readable `code` field. Consumers branch on `code`, never on
+message text.
+
+- **Throwing functions** (`sendXLM`, `depositToVault`, etc.) throw
+  `PocketPayError` on failure.
+- **Safe wrappers** (`safeSendXLM`, etc.) return a `PocketPayResult<T>`
+  discriminated union — `ok: true` with a value, or `ok: false` with an
+  error. They never reject.
+- **Enhanced wrappers** (`enhancedSendXLM`, etc.) return an
+  `EnhancedPocketPayResult<T>` that carries the same value/error plus
+  optional `ResultWarning[]` and `RecoveryHint[]`. Hints include an
+  `action` string (`"retry"`, `"fund_account"`, `"check_input"`, etc.),
+  a human-readable `message`, and `retryable` / `suggestedDelayMs` fields.
+
+The `wrapError` utility normalizes non-`PocketPayError` throwables into
+a `PocketPayError` with the original error as `cause`.
+
+### Security boundaries
+
+The SDK enforces the following invariants:
+
+1. **No key persistence.** The SDK never writes, caches, or logs secret
+   keys. `createWallet` generates a keypair in memory and returns it; the
+   consumer is responsible for persisting it to secure storage.
+
+2. **Preflight-only validation.** All input validation happens before any
+   network call. Malformed keys, amounts, or addresses never reach
+   Horizon or Soroban RPC.
+
+3. **No secret leakage in errors.** Validation errors for secret keys
+   use generic messages (`"Invalid Stellar secret key"`) without
+   including the key value. The `redactSecretKey` and `redactSensitive`
+   utilities are available for consumers who need to log key-adjacent
+   data.
+
+4. **Configuration validated eagerly.** `resolveConfig` validates every
+   field (network, URLs, timeout, contract ID) before returning. Invalid
+   configuration fails fast with a descriptive `PocketPayError` rather
+   than producing a malformed request downstream.
+
+5. **Testnet default.** The SDK defaults to Stellar Testnet. Mainnet
+   must be selected explicitly, preventing accidental real-asset
+   transactions during development.
+
+### Consumer responsibilities
+
+The SDK does not handle the following, and consuming applications must:
+
+- **Key backup and recovery.** Secret keys exist only in the return
+  value of `createWallet` or `importWallet`. If lost, the SDK provides
+  no recovery mechanism.
+
+- **Retry strategy.** The SDK's idempotency module handles post-submit
+  polling, but automatic retry of the initial submission is the
+  consumer's responsibility. The `enhanced*` variants provide
+  `RecoveryHint` data to guide this.
+
+- **Transaction confirmation UX.** The SDK returns transaction hashes
+  and ledger numbers, but does not poll for ledger close or provide
+  real-time confirmation callbacks. Consumers that need a "confirmed"
+  indicator should use `getTransactions` or the Stellar SDK's
+  `transactions().transaction(hash)` endpoint.
+
+- **Fee estimation.** The SDK uses `BASE_FEE` for all transactions.
+  Consumers that need dynamic fee management should use the Stellar
+  SDK's fee simulation directly.
+
+- **Nonce / sequence number management.** The SDK fetches the source
+  account state fresh for each transaction. Concurrent transactions
+  from the same account may encounter sequence-number conflicts. The
+  consumer is responsible for sequencing or using the Stellar SDK's
+  `TransactionBuilder` sequence-number management if concurrency is
+  required.
+
+## Consequences
+
+**Positive.** A single reference document makes the transaction lifecycle
+accessible to reviewers and new contributors without reading implementation
+code. The lifecycle stages, retry semantics, and security boundaries are
+now explicit and auditable.
+
+**Negative / trade-offs.** This document reflects current practice; as
+the codebase evolves, the ADR must be kept in sync or superseded. The
+lifecycle description is necessarily a simplification — edge cases in
+Horizon error classification or Soroban simulation are in the code, not
+here.
+
+**Neutral.** This ADR does not change any SDK behavior. It is a
+documentation-only record.
+
+## References
+
+- [ADR 0001 — SDK API Design Principles](./0001-api-design-principles.md)
+- [ADR 0002 — Account Abstraction Layer](./0002-account-abstraction.md)
+- [Network Error Handling](../network-errors.md)
+- [Error Handling](../error-handling.md)
+- [Security Best Practices](../security.md)
+- [Soroban Vault](../soroban-vault.md)