Pools

Unlimited Leverage uses an innovative tri-pool model

The tokens available for trading are separated into the 3 pools based on their market cap (MC) and volatility.

This provides additional security as it reduces the overall exposure of pools in case of an external attack or an ecosystem-wide "Black Swan" event.

For example: Pepe Jr. decides he wants to be more risk averse after blowing up his last trade and only deposits funds into the Bluechip Pool. As such, his funds can only be used to pay out profitable traders which are trading the assets in the Bluechip Pool (BTC and ETH). So, if a gigachad longs $DOGE at the picobottom and prints a 1000% winning trade, Pepe Jr.'s deposit is NOT used to payout that trader, and instead the LPs of the Degen Pool will pay the gigachad out.

Currently, Unlimited Leverage operates the following 3 USDC pools:

Bluechip Pool: This pool is exposed to the trades of the "safest" assets, namely those with the highest MC and lowest expected volatility.

Altcoin Pool: This pool is exposed to the trades of medium-risk assets with an MC and volatility to match. On top of this, it is fully exposed to the pool above it, the Bluechip Pool and its assets.

Degen Pool: This pool is exposed to the trades of the highest-risk assets, where MC is lower, and price volatility can be more extreme in either direction. Similarly, it is fully exposed to both the pools above it, the Altcoin and Bluechip Pools (as well as their assets).

Assets can be moved between pools if governance votes for it. For example, $DOGE may initially be an asset in the Degen Pool, but it could become an Altcoin Pool asset if governance votes for it.

Bluechip Pool

Bluechip Pool Asset Exposure
$BTC (Bitcoin)
$ETH (Ethereum)

Altcoin Pool

Altcoin Pool Asset Exposure
*Bluechip Pool Assets*
$ADA (Cardano)
$ARB (Arbitrum)
$BNB (BNB)
$DOT (Polkadot)
$MATIC (Polygon)
$XRP (Ripple)

Degen Pool

Degen Pool Asset Exposure
*Bluechip Pool Assets*
*Altcoin Pool Assets*
$APE (Apecoin)
$DOGE (Dogecoin)
$LINK (Chainlink)
$UNI (Uniswap)

How Pool Exposure works

Example 1 - A user makes a $BTC Trade

As shown in the table above, all 3 pools are exposed to $BTC. If the trade is profitable, the winnings are paid out with funds from all 3 liquidity pools, pro rata - this means that the bigger the size of the LP, the greater the percentage by which it participates in the earnings' pay out. Conversely, if the trade is losing, all 3 liquidity pools receive the trader's collateral, pro rata - again this means that the bigger the size of the LP, the more it will earn.

Example:

Pepe decides to trade Bitcoin ($BTC) and goes for a 10x leverage Long with his $1,000 USDC. This means he's effectively trading with $10,000.

The market is bullish on BTC, and it pumps by 10%. With his 10x leverage, Pepe's profit is 100% of his initial capital, which is $1,000.

Opening Fee: 0.07% of $10,000 = $7 Closing Fee: 0.07% of ($10,000 + $1,000 profit) = $7.70 Total Fees: $7 + $7.70 = $14.70

After deducting the fees, Pepe's net profit (excluding funding rate) is $985.30 ($1,000 - $14.70) which is paid out from all three liquidity pools (Bluechip, Altcoin, and Degen) pro rata.

Example 2 - A user makes an $XRP Trade

As shown in the table above, 2 pools are exposed to $XRP - the Altcoin Pool & the Degen Pool. If the trade is profitable, the winnings are paid out with funds from the Altcoin Pool & the Degen Pool pro rata - this means that the bigger the size of the LP, the greater the percentage by which it participates in the earnings' pay out. Conversely, if the trade is losing, the Altcoin Pool & the Degen Pool receive the trader's collateral, pro rata - again this means that the bigger the size of the LP, the more it will earn.

Since the Bluechip Pool isn't exposed to $XRP, its funds will not be affected by the trade.

Example:

Pepe tries his luck with Ripple ($XRP) and goes for a 50x leverage Long with his $1,000 USDC, meaning he's trading with $50,000.

The market is bearish on XRP, and it dumps by 1%. With his 50x leverage, Pepe's losses are 50% of his initial capital, which is $500.

Opening Fee: 0.07% of $50,000 = $35 Closing Fee: 0.07% of ($50,000 - $500 loss) = $34.65 Total Fees: $35 + $34.65 = $69.65

After adding the fees, Pepe's net loss (excluding funding fees) is $569.65 ($500 + $69.65) which is paid out to the Altcoin Pool and Degen Pool pro rata, since only these two pools are exposed to $XRP.

Example 3 - A user makes a $DOGE Trade

As shown in the table above, only 1 pool is exposed to $DOGE - the Degen Pool. If the trade is profitable, the winnings are paid out with funds only from the Degen Pool. Conversely, if the trade is losing, only the Degen Pool will receive the trader's collateral.

Since the Bluechip Pool & the Altcoin Pool aren't exposed to $DOGE, their funds will not be affected by the trade.

Example:

Pepe goes all out with a 100x leverage Long with his $100 USDC to trade Dogecoin ($DOGE), effectively trading with $10,000.

DOGE, being the meme coin favorite, rockets by 20%. With his 100x leverage, Pepe's profit is 2000% of his initial capital, which is $2000.

Opening Fee: 0.07% of $10,000 = $7 Closing Fee: 0.07% of ($10,000 + $2000 profit) = $8.4 Total Fees: $7 + 8.4 = $15.4

After deducting the fees, Pepe's net profit (excluding funding fees) is $1984.6 ($2000 - $15.4) and comes solely from the Degen Pool, while the Bluechip and Altcoin Pools remain untouched by this $DOGE trade.