The Money Pool is composed of several layers of smart contracts. It is the element that plays the most crucial role in ELYFI. Participants can perform major decentralized financial activities based on Money Pool contracts.
Loans collateralized by cryptocurrencies or real assets are generated through the Money Pool, and accrued interest is stored in the Money Pool. Investors with cryptocurrencies deposited in the Money Pool and investors who invest in asset-backed bonds can receive interest stored in the Money Pool in proportion to the size and duration of their investments. Investors can take out a loan equivalent to the total amount of cryptocurrencies they have deposited in the Money Pool, and if a loan exceeds this, the loan cannot be created. Therefore, to prevent this situation from occurring, the algorithm of Money Pool contracts automatically adjusts interest rates.
The Money Pool supply and demand for loans and total liquidity is the most important indicator that determines the utility of ELYFI. At the same time, the risks of the Money Pool are important factors in deciding ELYFI's risks. Therefore, there are mechanisms to minimize the supply and demand, liquidity, and risks associated with the Money Pool. The Governance decision-making model determines essential variables for managing Money Pool risks.