Pool Tokens

Lender positions in the Lending Pool are represented by ERC-20 Pool Tokens. Pool Tokens allow efficient and fair distribution of (i) the earnings from loan interest payments and (ii) any losses that cannot be absorbed by the First Loss Capital Provider’s stake. Pool Tokens are minted at the point of deposit into the Pool (or at the point of staking for First Loss Capital Providers) and are burned at the point of a Lender redeeming them in the relevant Lending Pool. Pool tokens belonging to the First Loss Capital Providers are also burned on loan defaults.

Given a Capital Token (USDC) amount, current total Pool Tokens and total Pool Capital, the corresponding Pool Token amount is calculated as:

$$poolTokenAmount = capitalTokenAmount * \frac{totalPoolTokens}{totalPoolCapital}$$

Given a Pool Token amount, current total Pool Tokens and total Pool Capital, tokens are calculated as:

$$capitalTokenAmount = poolTokenAmount * \frac{totalPoolCapital}{totalPoolTokens}$$

Pool Tokens may be exchanged outside of Lending Pools and the Sapling protocol, providing alternative liquidation options for the Lenders as opposed to redeeming them in the Lending Pools.