Pool Interactions

Overview

The Riskify protocol supports various types of pool interactions, enabling risk transfer and management across different pool types. This document details how different pool types interact and the mechanisms for risk propagation.

Pool Type Matrix

From/To	Structured	Cross	Passive Structured	Passive Cross
Structured	✓	✓	✓	✓
Cross	✓	✓	✓	✓
Passive Structured	✗	✗	✓	✓
Passive Cross	✗	✗	✓	✓

Interaction Types

1. Direct Risk Transfer

function _handleDirectPropagation(
    uint256 sourcePoolId,
    uint256 targetPoolId,
    uint256 amount
) internal

Direct risk transfer between pools with compatible risk profiles and sufficient capacity.

2. Bundled Risk Transfer

function _handleBundlePropagation(
    uint256 sourcePoolId,
    uint256 targetPoolId,
    uint256 amount,
    bytes memory data
) internal

Transfer of bundled risk positions with optimization for diversification and yield.

3. Cross-Chain Risk Transfer

function _handleCrossChainPropagation(
    uint256 sourcePoolId,
    uint256 targetPoolId,
    uint256 amount,
    bytes memory data
) internal

Risk transfer across different blockchain networks with validation and proof verification.

Pool-Specific Handling

Structured Pool Interactions

As Source

function _handleStructuredPoolSource(
    address sourcePool,
    address targetPool,
    uint256 amount,
    uint256 collateralAmount
) internal

• Validates tranche capacity
• Manages risk transfer from tranches
• Ensures collateral requirements

As Target

function _handleStructuredPoolTarget(
    address targetPool,
    uint256 sourcePoolId,
    uint256 amount,
    uint256 collateralAmount
) internal

• Calculates optimal tranche allocation
• Manages risk acceptance across tranches
• Updates tranche metrics

Cross Pool Interactions

As Source

function _handleCrossPoolSource(
    address sourcePool,
    address targetPool,
    uint256 amount,
    uint256 collateralAmount
) internal

• Validates cross-pool limits
• Creates cross-pool positions
• Manages correlation constraints

As Target

function _handleCrossPoolTarget(
    address targetPool,
    uint256 sourcePoolId,
    uint256 amount,
    uint256 collateralAmount
) internal

• Validates acceptance criteria
• Manages cross-pool risk acceptance
• Updates network metrics

Risk Calculation

Tranche Allocation

function _calculateTrancheAllocations(
    IStructuredPool.TrancheMetrics[] memory metrics,
    uint256 amount
) internal pure returns (uint256[] memory)

Optimizes risk allocation across tranches based on:

• Current utilization
• Risk capacity
• Target yield

Network Risk

function _calculateSystemicRisk(
    uint256 tokenId
) internal view returns (uint256)

Calculates systemic risk based on:

• Pool correlations
• Network connectivity
• Risk concentration

Validation and Safety

Pool Compatibility

• Type compatibility checks
• Capacity validation
• Risk limit verification
• Correlation constraints

Risk Limits

• Maximum concentration: 80%
• Maximum correlation: 70%
• Minimum collateral ratio: 10%
• Maximum leverage: 20x

Events

Risk Propagation Events

event RiskPropagated(
    uint256 indexed sourcePoolId,
    uint256 indexed targetPoolId,
    uint256 amount,
    uint256 collateralAmount,
    IPoolBase.PoolType sourceType,
    IPoolBase.PoolType targetType,
    bool isAutomatic,
    ParticipationReason reason,
    PropagationType propagationType,
    IBaseRiskToken.RiskTokenType tokenType
);

Bundle Events

event BundlePropagated(
    bytes32 indexed bundleId,
    uint256 indexed sourcePoolId,
    uint256 indexed targetPoolId,
    uint256[] tokenIds,
    uint256[] amounts,
    PropagationType propagationType
);

Error Handling

Common Error Cases

1. Insufficient capacity
2. Incompatible pool types
3. Exceeded risk limits
4. Invalid collateral ratio
5. Failed validation

Error Resolution

1. Retry with reduced amount
2. Use bundle propagation
3. Rebalance pools
4. Adjust risk parameters
5. Update validation criteria

Best Practices

1. Risk Assessment

   • Always validate pool compatibility
   • Check risk metrics before transfer
   • Monitor network effects

2. Optimization

   • Use bundle propagation for large transfers
   • Optimize tranche allocation
   • Balance network exposure

3. Monitoring

   • Track risk metrics
   • Monitor pool utilization
   • Watch correlation levels

4. Safety

   • Implement circuit breakers
   • Use gradual risk transfer
   • Maintain collateral buffers