📦Compounded Pool Premium pricing

This page contains in-depth explaination on how the Compounded Pool's funds affect the Policy Book's Premium.

The pricing of Policies purchased from the Compounded Pool is influenced by the ratio between the Compounded liquidity and the Collateral in a single Policy Book. The following scenarios determine the Premium pricing based on the Collateral provided by the Underwriters and the available Compounded Liquidity.

If the Collateral provided by Underwriters exceeds the available Compounded Liquidity, Policies purchased from the Compounded liquidity will be priced based on a 100% pool Utilization Ratio (UR).

Example:

Collateral: 3,000 USDT UR: 33% Capacity: 2,000 USDT Compounded Liquidity: 1,000 USDT

Suppose a user buys a Policy for 2,500 USDT. In this case, the Premium for the policy amount will be based on pricing with a 100% UR.

If the Collateral provided by Underwriters is less than or equal to the Compounded Liquidity provided by the Compounded Pool:

• The premium for the Policy Size covered by the Underwriters' Collateral is based on a 100% UR.

• The premium for the Policy Size covered by the Compounded Liquidity is based on the Compounded Utilization Ratio (CUR).

Example:

Collateral: 1,500 USDT UR: 33% Capacity: 1,000 USDT Compounded Liquidity: 2,000 USDT

Suppose a user buys a Policy for 2,500 USDT. In this case, the Premium for the 1,000 USDT covered by the Underwriters' Collateral will be based on pricing with a 100% UR. The premium for the remaining 1,500 USDT, covered by the Compounded Liquidity, will be based on pricing with a 75% CUR (1,500/2,000).