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Lending Pools

A lending pool is where credit comes from. Lenders deposit capital into a pool, the pool defines the loan policy that every margin account borrowing from it is bound to, and borrowers draw against that capital to take leveraged positions on the venues the policy allows.

What a lender sets​

A pool is defined by its policy, and the policy is where a lender expresses their risk appetite:

  • Permitted venues and assets — the surface the capital is allowed to touch.
  • Maximum position size — the ceiling on notional exposure per account.
  • Liquidation threshold — the loan-to-value ratio at which the risk engine closes a position.

Separately, the lender sets what borrowing from the pool costs. Interest is a pool parameter rather than part of the bound policy: the rate curve responds to utilization and can be retuned, while the four fields above are fixed for the life of every account created under them.

A lender who wants different policy parameters creates a different pool. Policies are not renegotiated per borrower, which is what keeps borrowing permissionless: there is nothing to approve, because everything that would have been approved was decided when the pool was created.

What a lender is and is not exposed to​

  • No counterparty exposure. The borrower is not the counterparty. The margin account is, and it is incapable of absconding with the principal.
  • No counterparty legal exposure. There is no master loan agreement to draft and no debtor to pursue.
  • No KYC to administer. Borrowers are anonymous by design, so there is no identity program to run.
  • Market risk remains. A position can still gap through its liquidation threshold. See Residual risk.

Repayment​

Repayment is structural rather than behavioral. When a position closes — by the borrower's choice or by liquidation — the proceeds settle through the account, principal and accrued interest return to the pool, and only the remainder is released to the borrower. The encumbered key will not sign a transaction that sends the pool's capital anywhere else, so there is no sequence of borrower actions that results in the pool being shorted while the account is solvent.

Providing liquidity​

Set up your own pool with your own parameters, or deposit into an existing one. Both paths are covered in Provide Lending Liquidity.