Pool Types

← Protocol Overview | Risk Management →

Table of Contents

• Pool Architecture
• Structured Pools
• Cross Pools
• Passive Pools
• Pool Interactions

Pool Architecture

The pool system is the core mechanism for risk aggregation and management in the Riskify Protocol. It provides a flexible framework for different types of risk pools, each with specialized features for specific use cases.

graph TB
    subgraph Core["Pool System"]
        direction TB
        IB["IPoolBase"]
        IS["IStructuredPool"]
        IC["ICrossPool"]
        IP["IPassivePool"]
        
        IB --> IS
        IB --> IC
        IB --> IP
    end

    subgraph Features["Pool Features"]
        direction TB
        VM["Vault Management"]
        RM["Risk Management"]
        MM["Margin Management"]
        PM["Portfolio Management"]
    end

    IS --> Features
    IC --> Features
    IP --> Features

Pool Architecture Explanation:

• Core Pool System: The foundation of the pool architecture:
  • IPoolBase: The base interface that defines common functionality for all pool types
  • IStructuredPool: Interface for pools with tranched risk structures
  • ICrossPool: Interface for pools that enable risk sharing arrangements
  • IPassivePool: Interface for simplified pools with automated management
• Pool Features: Common functionality shared across pool types:
  • Vault Management: Handles collateral and asset storage
  • Risk Management: Calculates and monitors risk metrics
  • Margin Management: Manages collateral requirements and margin calls
  • Portfolio Management: Optimizes risk allocation and performance

This modular architecture allows for specialized pool types while maintaining consistent interfaces and shared functionality.

Structured Pools

Structured pools organize risk into tranches with different risk/reward profiles, enabling precise risk segmentation and targeted investment opportunities.

graph TB
    subgraph Tranches["Tranche Structure"]
        ST["Senior Tranche"]
        MT["Mezzanine Tranche"]
        JT["Junior Tranche"]
    end

    subgraph Risk["Risk Flow"]
        direction LR
        IN["Risk Input"] --> ST
        ST --> MT
        MT --> JT
    end

    subgraph Yield["Yield Distribution"]
        direction RL
        Y["Yield"] --> JT
        JT --> MT
        MT --> ST
    end

Structured Pools Explanation:

• Tranche Structure: The hierarchical organization of risk:
  • Senior Tranche: Lowest risk, lowest yield, first to receive payments
  • Mezzanine Tranche: Medium risk, medium yield, second in payment priority
  • Junior Tranche: Highest risk, highest yield, last in payment priority
• Risk Flow: How risk is distributed through the tranches:
  • Risk enters at the senior tranche and flows down to junior tranches
  • Each tranche absorbs a portion of the risk based on its attachment and exhaustion points
• Yield Distribution: How returns are allocated:
  • Yield is generated from the entire pool
  • Distribution flows from junior to senior tranches
  • Junior tranches receive higher yields to compensate for higher risk

This structure enables investors to choose their preferred risk/reward profile while maintaining efficient risk allocation.

Key Features

• Tranche-based risk segmentation
• Customizable risk/reward profiles
• Automated yield distribution
• Advanced risk validation

Cross Pools

Cross pools enable risk transfer across different geographic regions or risk types, providing diversification and access to new risk markets.

sequenceDiagram
    participant SP as Source Pool
    participant CP as Cross Pool
    participant TP as Target Pool
    participant Oracle as Risk Oracle

    SP->>CP: Request Risk Transfer
    CP->>Oracle: Validate Risk
    Oracle->>CP: Return Risk Metrics
    CP->>TP: Propagate Risk
    TP->>CP: Confirm Acceptance
    CP->>SP: Complete Transfer

Cross Pools Explanation:

1. Risk Transfer Request: A source pool requests to transfer risk to a target pool
2. Risk Validation: The cross pool validates the risk using the risk oracle
3. Risk Metrics: The oracle returns comprehensive risk metrics for the transfer
4. Risk Propagation: The cross pool propagates the risk to the target pool
5. Acceptance Confirmation: The target pool confirms acceptance of the risk
6. Transfer Completion: The cross pool completes the transfer and notifies the source pool

This process ensures that risk is properly validated and transferred between pools, enabling efficient risk sharing and diversification.

Key Features

• Cross-chain risk propagation
• Multi-pool risk sharing
• Dynamic fee calculation
• Automated rebalancing

Passive Pools

Passive pools provide simplified access to risk exposure with automated management, making it easier for participants to engage with the protocol.

graph LR
    subgraph Passive["Passive Pool System"]
        direction TB
        LP["Liquidity Providers"]
        PP["Passive Pool"]
        YD["Yield Distribution"]
        
        LP -->|Deposit| PP
        PP -->|Generate| YD
        YD -->|Distribute| LP
    end

    subgraph Active["Active Pool Integration"]
        AP["Active Pools"]
        RM["Risk Management"]
        
        AP -->|Transfer Risk| PP
        PP -->|Accept Risk| RM
    end

Passive Pools Explanation:

• Passive Pool System:
  • Liquidity Providers: Participants who deposit assets into the passive pool
  • Passive Pool: The pool that accepts deposits and manages risk
  • Yield Distribution: System for generating and distributing returns to providers
• Active Pool Integration:
  • Active Pools: Other pool types that transfer risk to passive pools
  • Risk Management: System for managing risk within the passive pool
• Flow:
  • Liquidity providers deposit assets into the passive pool
  • The passive pool accepts risk transfers from active pools
  • The pool generates yield through risk management akin to non-custodial staking
  • Yield is distributed back to liquidity providers

This simplified approach enables broader participation in the protocol while maintaining efficient risk management.

Key Features

• Simplified participation
• Automated risk acceptance
• Optimized yield generation
• Reduced gas costs

Pool Interactions

Pool interactions define how different pool types can transfer risk between each other, creating a comprehensive risk transfer network.

graph TB
    subgraph Direct["Direct Transfer"]
        DT["Direct Risk Transfer"]
        DC["Direct Collateral"]
    end

    subgraph Bundle["Bundle Transfer"]
        BM["Bundle Manager"]
        BP["Bundle Propagation"]
    end

    subgraph Cross["Cross-Chain"]
        CC["Cross-Chain Bridge"]
        CP["Chain Propagation"]
    end

    DT --> BM
    BM --> CC
    DC --> BP
    BP --> CP

Pool Interactions Explanation:

• Direct Transfer:
  • Direct Risk Transfer: Simple one-to-one risk transfer between pools
  • Direct Collateral: Collateral management for direct transfers
• Bundle Transfer:
  • Bundle Manager: System for creating and managing risk bundles
  • Bundle Propagation: Process for transferring bundles between pools
• Cross-Chain:
  • Cross-Chain Bridge: Infrastructure for transferring risk across chains
  • Chain Propagation: Process for propagating risk through the bridge
• Flow:
  • Direct transfers can be bundled for efficiency
  • Bundles can be transferred across chains
  • Collateral flows follow the risk transfer path

This comprehensive interaction model enables flexible and efficient risk transfer throughout the protocol.

Risk Transfer Matrix

The risk transfer matrix defines which pool types can interact with each other and how.

Risk Transfer Matrix Explanation:

• Structured to Structured: Direct transfers between structured pools
• Structured to Cross: Bundle transfers from structured to cross pools
• Structured to Passive: Direct transfers from structured to passive pools
• Cross to Structured: Bundle transfers from cross to structured pools
• Cross to Cross: Direct transfers between cross pools
• Cross to Passive: Bundle transfers from cross to passive pools
• Passive to Structured: Direct transfers from passive to structured pools
• Passive to Cross: Bundle transfers from passive to cross pools
• Passive to Passive: Not applicable (passive pools don't accept from other passive pools)

This matrix provides clear guidelines for risk transfer between different pool types.

For more information on Pools:

• Pool Interactions →
• Visual Interactions →

For More information on Riskify's Architecture

• Architecture Details→
• Asset Tokenization →

Next Steps

• Explore Risk Management →
• View Integration Guide →
• Technical Reference →