> For the complete documentation index, see [llms.txt](https://docs.unlimited.trade/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.unlimited.trade/protocol/or-liquidity-pools/pools.md).

# Pools

## Unlimited Leverage uses an innovative <mark style="color:blue;">tri-pool</mark> 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.

{% hint style="info" %}
**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.
{% endhint %}

#### Currently, Unlimited Leverage operates the following **3 USDC pools:**&#x20;

<mark style="color:blue;">**Bluechip Pool:**</mark> This pool is exposed to the trades of the "safest" assets, namely those with the highest MC and lowest expected volatility.

<mark style="color:blue;">**Altcoin Pool:**</mark> 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 <mark style="color:blue;">**Bluechip Pool**</mark> and its asset&#x73;**.**

<mark style="color:blue;">**Degen Pool:**</mark> 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 <mark style="color:blue;">**Altcoin**</mark> and <mark style="color:blue;">**Bluechip Pools**</mark> (as well as their assets).&#x20;

{% hint style="info" %}
Assets can be moved between pools if governance votes for it. \
\
For example, <mark style="color:blue;">**$DOGE**</mark> may initially be an asset in the <mark style="color:blue;">**Degen Pool**</mark>, but it could become an <mark style="color:blue;">**Altcoin Pool**</mark> asset if governance votes for it.
{% endhint %}

{% tabs %}
{% tab title="Bluechip Pool" %}

|             Bluechip Pool Asset Exposure             |
| :--------------------------------------------------: |
|  <mark style="color:blue;">**$BTC**</mark> (Bitcoin) |
| <mark style="color:blue;">**$ETH**</mark> (Ethereum) |
|                     {% endtab %}                     |

{% tab title="Altcoin Pool" %}

|                  Altcoin Pool Asset Exposure                  |
| :-----------------------------------------------------------: |
| \*<mark style="color:blue;">**Bluechip Pool Assets**</mark>\* |
|      <mark style="color:blue;">**$ADA**</mark> (Cardano)      |
|      <mark style="color:blue;">**$ARB**</mark> (Arbitrum)     |
|        <mark style="color:blue;">**$BNB**</mark> (BNB)        |
|      <mark style="color:blue;">**$DOT**</mark> (Polkadot)     |
|     <mark style="color:blue;">**$MATIC**</mark> (Polygon)     |
|       <mark style="color:blue;">**$XRP**</mark> (Ripple)      |
|                          {% endtab %}                         |

{% tab title="Degen Pool" %}

|                   Degen Pool Asset Exposure                   |
| :-----------------------------------------------------------: |
| \*<mark style="color:blue;">**Bluechip Pool Assets**</mark>\* |
|  \*<mark style="color:blue;">**Altcoin Pool Assets**</mark>\* |
|      <mark style="color:blue;">**$APE**</mark> (Apecoin)      |
|     <mark style="color:blue;">**$DOGE**</mark> (Dogecoin)     |
|     <mark style="color:blue;">**$LINK**</mark> (Chainlink)    |
|      <mark style="color:blue;">**$UNI**</mark> (Uniswap)      |
|                          {% endtab %}                         |
|                         {% endtabs %}                         |

## How Pool Exposure works

#### Example 1 - A user makes a <mark style="color:blue;">**$BTC**</mark> Trade

As shown in the table above, all 3 pools are exposed to <mark style="color:blue;">**$BTC**</mark>. \
\
If the trade is profitable, the winnings are paid out with funds from <mark style="color:blue;">**all 3 liquidity pools**</mark>, 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, <mark style="color:blue;">**all 3 liquidity pools**</mark> receive the trader's collateral, pro rata - again this means that the bigger the size of the LP, the more it will earn.

{% hint style="info" %}
**Example:**&#x20;

Pepe decides to trade **Bitcoin (**<mark style="color:blue;">**$BTC**</mark>) 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 <mark style="color:blue;">**all three liquidity pools**</mark> (**Bluechip, Altcoin, and Degen**) pro rata.
{% endhint %}

#### Example 2 - A user makes an <mark style="color:blue;">**$XRP**</mark> Trade

As shown in the table above, 2 pools are exposed to <mark style="color:blue;">**$XRP**</mark> -  the <mark style="color:blue;">**Altcoin Pool**</mark> & the <mark style="color:blue;">**Degen Pool**</mark>.\
\
If the trade is profitable, the winnings are paid out with funds from the <mark style="color:blue;">**Altcoin Pool**</mark> & the <mark style="color:blue;">**Degen Pool**</mark> 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 <mark style="color:blue;">**Altcoin Pool**</mark> & the <mark style="color:blue;">**Degen Pool**</mark> 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 <mark style="color:blue;">**Bluechip Pool**</mark> isn't exposed to <mark style="color:blue;">**$XRP**</mark>, **its funds will not be affected by the trade**.

{% hint style="info" %}
**Example:**&#x20;

Pepe tries his luck with **Ripple (**<mark style="color:blue;">**$XRP**</mark>) 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 + $69.65) which is paid out to the <mark style="color:blue;">**Altcoin Pool**</mark> and <mark style="color:blue;">**Degen Pool**</mark> pro rata, since only these two pools are exposed to <mark style="color:blue;">**$XRP**</mark>.
{% endhint %}

#### Example 3 - A user makes a <mark style="color:blue;">**$DOGE**</mark> Trade

As shown in the table above, only 1 pool is exposed to <mark style="color:blue;">**$DOGE**</mark> - the <mark style="color:blue;">**Degen Pool**</mark>.\
\
If the trade is profitable, the winnings are paid out with funds only from the <mark style="color:blue;">**Degen Pool.**</mark>\
\
Conversely, if the trade is losing, only the <mark style="color:blue;">**Degen Pool**</mark> will receive the trader's collateral.

Since the <mark style="color:blue;">**Bluechip Pool**</mark> & the <mark style="color:blue;">**Altcoin Pool**</mark> aren't exposed to <mark style="color:blue;">**$DOGE**</mark>, **their funds will not be affected by the trade**.

{% hint style="info" %}
**Example:**&#x20;

Pepe goes all out with a 100x leverage Long with his $100 USDC to trade **Dogecoin** (<mark style="color:blue;">**$DOGE**</mark>), 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 - $15.4) and comes solely from the <mark style="color:blue;">**Degen Pool,**</mark> while the <mark style="color:blue;">**Bluechip**</mark> and <mark style="color:blue;">**Altcoin**</mark> <mark style="color:blue;">**Pools**</mark> remain untouched by this <mark style="color:blue;">**$DOGE**</mark> trade.
{% endhint %}