# Compounded Pool Premium pricing

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).

{% hint style="info" %}
**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. \
\
\&#xNAN;*In this case, the Premium for the policy amount will be based on pricing with a 100% UR.*
{% endhint %}

#### 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).

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


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