Capital Pool

ERC-4626 vault mechanics, yield adapters, and solvency controls

TL;DR: The CapitalPool is an ERC-4626 vault that holds all underwriter capital. It manages solvency, routes claim payouts, and deploys idle funds to whitelisted yield strategies.

Architecture

How Capital Flows

1. Deposits

Underwriters deposit single-sided assets (USDC) into the CapitalPool and receive shares proportional to the vault's NAV.

2. Capital Locking

When a policy is sold, the IntentMatcher instructs the CapitalPool to lock the backing capital. Locked capital cannot be withdrawn, but still earns yield.

3. Yield Generation

All capital - both locked and idle - is deployed to whitelisted yield adapters on deposit. The locked/idle distinction only affects withdrawability, not yield generation:

Adapter	Strategy	Risk
Aave V3	Supply USDC as lending deposits	Low
Compound V3	Supply USDC as lending deposits	Low

Yield adapters are whitelisted by protocol governance. Only battle-tested, blue-chip DeFi protocols are approved to minimize compounding smart contract risk.

4. Claim Payouts

When a claim is filed, the broader payout runtime follows the liquidity waterfall:

Underwriter adapter withdrawals
Private reinsurance hook collection, if that policy was actually reinsured
Remaining underwriter idle liquidity
Backstop Pool
Protocol treasury
Any unpaid remainder becomes claimant debt

5. Withdrawals

Underwriters can withdraw unlocked capital instantly. Capital actively backing policies remains locked until those policies expire or settle.

ERC-4626 Vault

The CapitalPool implements the ERC-4626 Tokenized Vault Standard:

deposit(assets) → Receive shares proportional to NAV
withdraw(shares) → Redeem shares for underlying assets
totalAssets() → Total capital (locked + idle + external yield)
convertToShares(assets) → Preview share amount for deposit
convertToAssets(shares) → Preview redemption amount

Share price increases as premiums and yield accumulate, and decreases when claims are paid.

Solvency Controls

Control	Mechanism
Capital locking	Backing capital stays locked until policies expire, preventing claim front-running
Risk points budget	Limits total exposure per syndicate
Mutex groups	Block allocation to more than one correlated pool in the same group
Deposit caps	Protocol-level TVL limits during guarded launch