Pool risks
A pool takes the other side of every trade. That is where its return comes from, and it is also where its losses come from. Read this page once before you deposit.
A pool is not a savings rate. Winning traders are paid from it, and the value of your shares can
fall.
Winning traders are paid from your deposit
Every payout to a trader is a loss to the pool. The pool's pricing gives it an edge over many trades, but a strong trend can produce a run of winners that outweighs the premium collected. The short pool is most exposed to a sharp fall. The long pool is most exposed to a sharp rise.
There is no floor on share value beyond the utilisation cap, which limits how much of the pool can be at risk at once.
Only the idle part can be withdrawn
Money backing open positions cannot leave until those positions settle. If you need funds on a specific day, a pool may not be able to give them to you on that day. Positions run for up to 30 days, so in the worst case a full exit takes about that long.
The long pool holds the market's asset
A long pool's balance is in cbBTC, not dollars. Its dollar value follows the Bitcoin price regardless of what the pool earns. If Bitcoin falls 30%, your long-pool balance is worth 30% less in dollars before any premium or payouts are counted.
The pool can pause
When the price feed is unsafe the pool cannot value its open positions, so it pauses deposits and withdrawals until the feed recovers. Settlement and trader payouts continue. Your money is not lost during a pause, but it is not reachable either.
Parameters can change
The fee, the utilisation cap, and the pool's other limits are protocol parameters. Governance can adjust them within ceilings fixed in the contract code, and a change to a pricing or risk module takes effect only after a 48-hour delay. A change could raise or lower the pool's return.
Smart contract and token risk
The pool is a smart contract on Base holding USDC or cbBTC. Contracts can have bugs, and both tokens carry their own issuer and technical risk. The protocol is open source and designed to refuse an action rather than perform it on bad data, but no software is risk free.
Past APY is not future APY
The 30-day APY on the pool page is what the share value did last month. It includes both premium earned and payouts made. It says nothing about next month.
What the protocol does protect
- Positions are fully collateralised at open. The pool never owes more than it has locked, so it cannot go into deficit from trading.
- Utilisation is capped. Most of the pool is always idle, which is what keeps withdrawals possible.
- Share pricing is conservative in both directions. Deposits and withdrawals are priced so that neither can take value from the depositors who stay.
- Premium is earned over time. Nobody can deposit for a day to capture a month of premium.
- The pool never lends its money out. It backs Isometric positions and nothing else.