diff --git a/frontend/src/app/hooks/useApi.optimisticRollback.test.tsx b/frontend/src/app/hooks/useApi.optimisticRollback.test.tsx
new file mode 100644
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+++ b/frontend/src/app/hooks/useApi.optimisticRollback.test.tsx
@@ -0,0 +1,343 @@
+/**
+ * hooks/useApi.optimisticRollback.test.tsx
+ *
+ * Tests for #1226: optimistic-update snapshot, rollback on error, and
+ * onSettled invalidation in useRepayLoan, useDepositToPool, and
+ * useWithdrawFromPool.
+ */
+
+import { renderHook, waitFor } from "@testing-library/react";
+import { QueryClient, QueryClientProvider } from "@tanstack/react-query";
+import type { ReactNode } from "react";
+import {
+  useRepayLoan,
+  useDepositToPool,
+  useWithdrawFromPool,
+  queryKeys,
+  type LoanDetails,
+  type PoolStats,
+  type DepositorPortfolio,
+  type BorrowerLoan,
+} from "./useApi";
+
+function createTestHarness() {
+  const queryClient = new QueryClient({
+    defaultOptions: {
+      mutations: { retry: false },
+      queries: { retry: false },
+    },
+  });
+  const wrapper = ({ children }: { children: ReactNode }) => (
+    <QueryClientProvider client={queryClient}>{children}</QueryClientProvider>
+  );
+  return { queryClient, wrapper };
+}
+
+function mockFetchFailure() {
+  return jest.fn().mockResolvedValue({
+    ok: false,
+    status: 500,
+    statusText: "Internal Server Error",
+    json: async () => ({ message: "boom" }),
+  });
+}
+
+function mockFetchSuccess<T>(data: T) {
+  return jest.fn().mockResolvedValue({
+    ok: true,
+    status: 200,
+    json: async () => data,
+  });
+}
+
+const BORROWER = "GBORROWER123";
+const DEPOSITOR = "GDEPOSITOR456";
+const LOAN_ID = 1;
+
+const seedLoanDetail = (): LoanDetails => ({
+  loanId: LOAN_ID,
+  principal: 1000,
+  accruedInterest: 50,
+  totalRepaid: 200,
+  totalOwed: 850,
+  interestRate: 5,
+  status: "active",
+  events: [],
+});
+
+const seedBorrowerLoans = (): BorrowerLoan[] => [
+  {
+    id: LOAN_ID,
+    principal: 1000,
+    accruedInterest: 50,
+    totalOwed: 850,
+    totalRepaid: 200,
+    nextPaymentDeadline: "2026-07-01",
+    status: "active",
+    borrower: BORROWER,
+  },
+];
+
+const seedPoolStats = (): PoolStats => ({
+  totalDeposits: 10000,
+  totalOutstanding: 5000,
+  utilizationRate: 0.5,
+  apy: 8,
+  activeLoansCount: 3,
+});
+
+const seedDepositor = (): DepositorPortfolio => ({
+  address: DEPOSITOR,
+  depositAmount: 500,
+  sharePercent: 5,
+  estimatedYield: 40,
+  apy: 8,
+  firstDepositAt: "2026-01-01",
+});
+
+describe("useRepayLoan optimistic rollback", () => {
+  const originalFetch = global.fetch;
+
+  afterEach(() => {
+    global.fetch = originalFetch;
+    jest.restoreAllMocks();
+  });
+
+  function seedRepayCache(queryClient: QueryClient) {
+    const loanDetail = seedLoanDetail();
+    const borrowerLoans = seedBorrowerLoans();
+    const poolStats = seedPoolStats();
+
+    queryClient.setQueryData(queryKeys.loans.detail(String(LOAN_ID)), loanDetail);
+    queryClient.setQueryData(queryKeys.borrowerLoans.byAddress(BORROWER), borrowerLoans);
+    queryClient.setQueryData(queryKeys.pool.stats(), poolStats);
+
+    return { loanDetail, borrowerLoans, poolStats };
+  }
+
+  it("onMutate updates loan detail optimistically while pending", async () => {
+    global.fetch = mockFetchSuccess({ txHash: "abc" }) as unknown as typeof fetch;
+    const { queryClient, wrapper } = createTestHarness();
+    seedRepayCache(queryClient);
+
+    const { result } = renderHook(() => useRepayLoan(), { wrapper });
+
+    result.current.mutate({ loanId: LOAN_ID, amount: 100, borrowerAddress: BORROWER });
+
+    await waitFor(() => {
+      const cached = queryClient.getQueryData<LoanDetails>(queryKeys.loans.detail(String(LOAN_ID)));
+      expect(cached?.totalOwed).toBe(750);
+      expect(cached?.totalRepaid).toBe(300);
+      expect(cached?.status).toBe("active");
+    });
+  });
+
+  it("onMutate flips status to repaid when repayment covers totalOwed", async () => {
+    global.fetch = mockFetchSuccess({ txHash: "abc" }) as unknown as typeof fetch;
+    const { queryClient, wrapper } = createTestHarness();
+    seedRepayCache(queryClient);
+
+    const { result } = renderHook(() => useRepayLoan(), { wrapper });
+
+    result.current.mutate({ loanId: LOAN_ID, amount: 850, borrowerAddress: BORROWER });
+
+    await waitFor(() => {
+      const cached = queryClient.getQueryData<LoanDetails>(queryKeys.loans.detail(String(LOAN_ID)));
+      expect(cached?.totalOwed).toBe(0);
+      expect(cached?.totalRepaid).toBe(1050);
+      expect(cached?.status).toBe("repaid");
+    });
+  });
+
+  it("onError restores exact previous loan detail, borrower loans, and pool stats", async () => {
+    global.fetch = mockFetchFailure() as unknown as typeof fetch;
+    const { queryClient, wrapper } = createTestHarness();
+    const { loanDetail, borrowerLoans, poolStats } = seedRepayCache(queryClient);
+
+    const { result } = renderHook(() => useRepayLoan(), { wrapper });
+
+    result.current.mutate({ loanId: LOAN_ID, amount: 100, borrowerAddress: BORROWER });
+
+    await waitFor(() => expect(result.current.isError).toBe(true));
+
+    expect(queryClient.getQueryData(queryKeys.loans.detail(String(LOAN_ID)))).toEqual(loanDetail);
+    expect(queryClient.getQueryData(queryKeys.borrowerLoans.byAddress(BORROWER))).toEqual(
+      borrowerLoans,
+    );
+    expect(queryClient.getQueryData(queryKeys.pool.stats())).toEqual(poolStats);
+  });
+
+  it("onSettled invalidates loans.detail, borrowerLoans.byAddress, and pool.stats", async () => {
+    global.fetch = mockFetchSuccess({ txHash: "abc" }) as unknown as typeof fetch;
+    const { queryClient, wrapper } = createTestHarness();
+    seedRepayCache(queryClient);
+    const invalidateSpy = jest.spyOn(queryClient, "invalidateQueries");
+
+    const { result } = renderHook(() => useRepayLoan(), { wrapper });
+
+    result.current.mutate({ loanId: LOAN_ID, amount: 100, borrowerAddress: BORROWER });
+
+    await waitFor(() => expect(result.current.isSuccess).toBe(true));
+
+    expect(invalidateSpy).toHaveBeenCalledWith({
+      queryKey: queryKeys.loans.detail(String(LOAN_ID)),
+    });
+    expect(invalidateSpy).toHaveBeenCalledWith({
+      queryKey: queryKeys.borrowerLoans.byAddress(BORROWER),
+    });
+    expect(invalidateSpy).toHaveBeenCalledWith({ queryKey: queryKeys.pool.stats() });
+  });
+});
+
+describe("useWithdrawFromPool optimistic rollback", () => {
+  const originalFetch = global.fetch;
+
+  afterEach(() => {
+    global.fetch = originalFetch;
+    jest.restoreAllMocks();
+  });
+
+  function seedWithdrawCache(queryClient: QueryClient) {
+    const poolStats = seedPoolStats();
+    const depositor = seedDepositor();
+
+    queryClient.setQueryData(queryKeys.pool.stats(), poolStats);
+    queryClient.setQueryData(queryKeys.pool.depositor(DEPOSITOR), depositor);
+
+    return { poolStats, depositor };
+  }
+
+  it("onMutate clamps depositAmount and totalDeposits at 0 when withdrawal exceeds balance", async () => {
+    global.fetch = mockFetchSuccess({
+      unsignedTxXdr: "xdr",
+      networkPassphrase: "pass",
+    }) as unknown as typeof fetch;
+    const { queryClient, wrapper } = createTestHarness();
+    queryClient.setQueryData(queryKeys.pool.stats(), { ...seedPoolStats(), totalDeposits: 30 });
+    queryClient.setQueryData(queryKeys.pool.depositor(DEPOSITOR), {
+      ...seedDepositor(),
+      depositAmount: 30,
+    });
+
+    const { result } = renderHook(() => useWithdrawFromPool(), { wrapper });
+
+    result.current.mutate({
+      amount: 100,
+      depositorAddress: DEPOSITOR,
+      token: "USDC",
+    });
+
+    await waitFor(() => {
+      const cachedDepositor = queryClient.getQueryData<DepositorPortfolio>(
+        queryKeys.pool.depositor(DEPOSITOR),
+      );
+      const cachedStats = queryClient.getQueryData<PoolStats>(queryKeys.pool.stats());
+      expect(cachedDepositor?.depositAmount).toBe(0);
+      expect(cachedStats?.totalDeposits).toBe(0);
+    });
+  });
+
+  it("onError restores exact previous pool stats and depositor portfolio", async () => {
+    global.fetch = mockFetchFailure() as unknown as typeof fetch;
+    const { queryClient, wrapper } = createTestHarness();
+    const { poolStats, depositor } = seedWithdrawCache(queryClient);
+
+    const { result } = renderHook(() => useWithdrawFromPool(), { wrapper });
+
+    result.current.mutate({
+      amount: 50,
+      depositorAddress: DEPOSITOR,
+      token: "USDC",
+    });
+
+    await waitFor(() => expect(result.current.isError).toBe(true));
+
+    expect(queryClient.getQueryData(queryKeys.pool.stats())).toEqual(poolStats);
+    expect(queryClient.getQueryData(queryKeys.pool.depositor(DEPOSITOR))).toEqual(depositor);
+  });
+
+  it("onSettled invalidates pool.stats and pool.depositor", async () => {
+    global.fetch = mockFetchSuccess({
+      unsignedTxXdr: "xdr",
+      networkPassphrase: "pass",
+    }) as unknown as typeof fetch;
+    const { queryClient, wrapper } = createTestHarness();
+    seedWithdrawCache(queryClient);
+    const invalidateSpy = jest.spyOn(queryClient, "invalidateQueries");
+
+    const { result } = renderHook(() => useWithdrawFromPool(), { wrapper });
+
+    result.current.mutate({
+      amount: 50,
+      depositorAddress: DEPOSITOR,
+      token: "USDC",
+    });
+
+    await waitFor(() => expect(result.current.isSuccess).toBe(true));
+
+    expect(invalidateSpy).toHaveBeenCalledWith({ queryKey: queryKeys.pool.stats() });
+    expect(invalidateSpy).toHaveBeenCalledWith({
+      queryKey: queryKeys.pool.depositor(DEPOSITOR),
+    });
+  });
+});
+
+describe("useDepositToPool optimistic rollback", () => {
+  const originalFetch = global.fetch;
+
+  afterEach(() => {
+    global.fetch = originalFetch;
+    jest.restoreAllMocks();
+  });
+
+  it("onMutate increases pool stats and depositor depositAmount optimistically", async () => {
+    global.fetch = mockFetchSuccess({
+      unsignedTxXdr: "xdr",
+      networkPassphrase: "pass",
+    }) as unknown as typeof fetch;
+    const { queryClient, wrapper } = createTestHarness();
+    const poolStats = seedPoolStats();
+    const depositor = seedDepositor();
+    queryClient.setQueryData(queryKeys.pool.stats(), poolStats);
+    queryClient.setQueryData(queryKeys.pool.depositor(DEPOSITOR), depositor);
+
+    const { result } = renderHook(() => useDepositToPool(), { wrapper });
+
+    result.current.mutate({
+      amount: 200,
+      depositorAddress: DEPOSITOR,
+      token: "USDC",
+    });
+
+    await waitFor(() => {
+      const cachedStats = queryClient.getQueryData<PoolStats>(queryKeys.pool.stats());
+      const cachedDepositor = queryClient.getQueryData<DepositorPortfolio>(
+        queryKeys.pool.depositor(DEPOSITOR),
+      );
+      expect(cachedStats?.totalDeposits).toBe(10200);
+      expect(cachedDepositor?.depositAmount).toBe(700);
+    });
+  });
+
+  it("onError restores exact previous pool stats and depositor portfolio", async () => {
+    global.fetch = mockFetchFailure() as unknown as typeof fetch;
+    const { queryClient, wrapper } = createTestHarness();
+    const poolStats = seedPoolStats();
+    const depositor = seedDepositor();
+    queryClient.setQueryData(queryKeys.pool.stats(), poolStats);
+    queryClient.setQueryData(queryKeys.pool.depositor(DEPOSITOR), depositor);
+
+    const { result } = renderHook(() => useDepositToPool(), { wrapper });
+
+    result.current.mutate({
+      amount: 200,
+      depositorAddress: DEPOSITOR,
+      token: "USDC",
+    });
+
+    await waitFor(() => expect(result.current.isError).toBe(true));
+
+    expect(queryClient.getQueryData(queryKeys.pool.stats())).toEqual(poolStats);
+    expect(queryClient.getQueryData(queryKeys.pool.depositor(DEPOSITOR))).toEqual(depositor);
+  });
+});