Piron Pools

Pools: The Heart of Piron Finance

What is a Pool?

A pool is a smart contract that collects funds from multiple investors to purchase a specific financial instrument. Think of it as a digital investment club where everyone pools their money together to access opportunities that would otherwise be out of reach.

Pool Anatomy

┌─────────────────────────────────────────────────────────────┐
│                        POOL STRUCTURE                        │
├─────────────────────────────────────────────────────────────┤
│                                                              │
│  ┌────────────────┐    ┌────────────────┐                  │
│  │ Liquidity Pool │    │  Pool Manager  │                  │
│  │   (ERC4626)    │◄──►│ (Business Logic)│                  │
│  │                │    │                 │                  │
│  │ - Your Deposits│    │ - Controls Flow │                  │
│  │ - Share Tokens │    │ - Calculates    │                  │
│  │ - Asset Value  │    │ - Validates     │                  │
│  └────────────────┘    └────────────────┘                  │
│           │                     │                            │
│           ▼                     ▼                            │
│  ┌────────────────┐    ┌────────────────┐                  │
│  │  Pool Escrow   │    │  Pool Oracle   │                  │
│  │                │    │                │                  │
│  │ - Holds Funds  │    │ - Verifies     │                  │
│  │ - Secure       │    │ - Reports      │                  │
│  │ - Multisig     │    │ - Validates    │                  │
│  └────────────────┘    └────────────────┘                  │
│                                                              │
└─────────────────────────────────────────────────────────────┘

Types of Pools

1. Discounted Bill Pools

Structure: Discount-based

How it works: Buy below face value, redeem at face value

Duration: 30-364 days

Risk Level: Lowest

Real Example: Nigerian 91-Day T-Bill Pool

Pool Details:
├── Name: "FGN 91-Day Treasury Bill - Series 45"
├── Currency: cNGN (Nigerian Naira stablecoin)
├── Target Raise: ₦50,000,000
├── Minimum Investment: ₦10,000
├── Discount Rate: 18%
├── Face Value: ₦60,975,609
└── Expected Return: 21.95% (annualized)

Timeline:
Day 0-7: Funding Period
├── Users deposit cNGN
├── Real-time tracking of progress
└── Can withdraw without penalty

Day 8: Investment
├── SPV takes ₦50M to CBN auction
├── Purchases T-Bills at 18% discount
└── Receives ₦60.98M face value bills

Day 9-98: Holding Period
├── Investment locked and earning
├── Share value accruing daily
└── Secondary market trading available

Day 99: Maturity
├── CBN pays ₦60,975,609
├── Pool receives full payment
└── Users can withdraw principal + profit

2. Interest bearingPools

Structure: Coupon-bearing

How it works: Regular interest payments + principal at maturity Duration: 1-30 years

Risk Level: Low-Medium

Real Example: 2-Year Corporate Bond Pool

Pool Details:
├── Name: "Dangote Cement 2-Year Bond"
├── Currency: cNGN
├── Target Raise: ₦100,000,000
├── Minimum Investment: ₦50,000
├── Coupon Rate: 16% annually
├── Payment Schedule: Quarterly
└── Credit Rating: A+ (Investment Grade)

Cash Flow Schedule:
├── Quarter 1: ₦4,000,000 coupon
├── Quarter 2: ₦4,000,000 coupon
├── Quarter 3: ₦4,000,000 coupon
├── Quarter 4: ₦4,000,000 coupon
├── ...continues for 8 quarters
└── At Maturity: ₦100,000,000 principal + final coupon

Your ₦1,000,000 Investment:
├── Quarterly Income: ₦40,000
├── Total Coupons: ₦320,000 (over 2 years)
├── Principal Return: ₦1,000,000
└── Total Received: ₦1,320,000

Pool Lifecycle in Detail

Phase 1: FUNDING (Days 1-7)

Status Color: 🟡 Yellow What's Happening: Pool is open and accepting investments

User Experience:
├── Browse available pools
├── Check funding progress in real-time
├── Deposit funds (instant)
├── Receive shares 1:1
├── Can withdraw anytime without penalty
└── Watch pool fill up

Behind the Scenes:
├── Smart contract accepts deposits
├── Funds sent to secure escrow
├── Share tokens minted to users
├── Pool manager tracks progress
└── Automatic close at target or deadline

Key Metrics During Funding:

  • Fill Rate: How fast is pool filling? (e.g., ₦7M per day)

  • Participation: Number of unique investors

  • Average Investment: Typical deposit size

  • Time Remaining: Countdown to epoch end

Phase 2: PENDING_INVESTMENT (Days 8-9)

Status Color: 🟠 Orange What's Happening: SPV is deploying funds

The 48-Hour Window:
├── Hour 0-12: SPV prepares documentation
├── Hour 12-24: Submits bids to auction
├── Hour 24-36: Awaits allocation results
├── Hour 36-48: Confirms investment on-chain
└── Hour 48: Status changes to INVESTED

What Can Go Wrong?
├── Oversubscribed auction (partial allotment)
├── Minimum lot size not met
├── Technical issues with auction platform
└── Solution: Automatic refund mechanism

Phase 3: INVESTED (Days 10-89)

Status Color: 🟢 Green What's Happening: Your money is working

Daily Operations:
├── Share value increases daily
├── For bonds: Coupon payments arrive
├── SPV monitors investment
├── Oracle updates valuations
└── Secondary market active

Share Price Calculation:
Day 10: 1 share = 1.002 cNGN
Day 30: 1 share = 1.041 cNGN
Day 60: 1 share = 1.098 cNGN
Day 89: 1 share = 1.195 cNGN

Phase 4: MATURED (Day 90+)

Status Color: 🔵 Blue What's Happening: Investment complete, withdraw anytime

Maturity Process:
├── SPV receives payment from issuer
├── Funds transferred to pool
├── Final share value calculated
├── Withdrawal window opens
└── No time pressure - funds safe

Final Numbers (₦1M investment):
├── Shares Owned: 1,000,000
├── Share Value: 1.195
├── Total Value: ₦1,195,000
├── Profit: ₦195,000
└── Return: 19.5% in 91 days

Advanced Pool Mechanics

Share Pricing (ERC4626)

The pool uses the ERC4626 standard for share calculations:

Share Price = Total Assets / Total Shares

Example Progression:
├── Funding: 1 share = 1 cNGN (always)
├── Day 30: Assets = ₦51M, Shares = 50M → 1.02 cNGN/share
├── Day 60: Assets = ₦53M, Shares = 50M → 1.06 cNGN/share
├── Maturity: Assets = ₦60.98M, Shares = 50M → 1.22 cNGN/share

Partial Allotment Handling

When SPV can't invest all funds:

Scenario: Oversubscribed Auction
├── Pool Raised: ₦50,000,000
├── SPV Bid: ₦50,000,000
├── Allocated: ₦35,000,000 (70%)
└── Excess: ₦15,000,000 (30%)

Automatic Distribution:
├── Each user gets 70% invested
├── 30% marked for refund
├── 0.1% fee on refunds only
└── Claim refund separately

Your Position:
├── You Invested: ₦1,000,000
├── Invested Portion: ₦700,000 (earning returns)
├── Refund Available: ₦299,000 (after 0.1% fee)
└── Total: ₦700,000 working + ₦299,000 refunded

Coupon Distribution (Bonds Only)

For bonds with periodic payments:

Coupon Arrival Process:
1. Issuer pays coupon to SPV
2. SPV transfers to pool
3. Pool updates totalAssets
4. Share value increases automatically
5. No action needed from users

Example with ₦100M bond, 16% coupon:
├── Quarter 1 Coupon: ₦4,000,000 arrives
├── Total Assets: ₦100M → ₦104M
├── Share Price: 1.00 → 1.04
├── Your 1M shares: Worth ₦1.04M now
└── Compound Effect: Next coupon on higher base

Emergency Mechanisms

Pools have built-in safety features:

Emergency Triggers:
├── Insufficient funding (<50% of target)
├── SPV fails to invest
├── Regulatory halt
└── Smart contract issue

Emergency Process:
├── Status → EMERGENCY
├── All funds returnable
├── No penalties
├── Priority gas
└── Full audit trail

Pool Economics

Fee Structure

Standard Fees:
├── Protocol Fee: 0.5% on successful investment
├── SPV Fee: Included in returns
├── Gas Costs: User pays (minimal)
└── No hidden fees

Example on ₦1,000,000 investment:
├── Investment Amount: ₦1,000,000
├── Protocol Fee: ₦5,000 (0.5%)
├── Working Capital: ₦995,000
├── Returns Calculate on: ₦995,000
└── Still profitable! (19.5% net vs 20% gross)

Minimum Viable Pool

Economics Requirements:
├── Minimum Raise: ₦10,000,000
├── Reason: SPV operational costs
├── Maximum Raise: ₦500,000,000
├── Reason: Market liquidity limits
└── Sweet Spot: ₦50-100M (easy to fill & invest)

Choosing the Right Pool

Decision Framework

1. Investment Horizon
   ├── < 90 days: T-Bills
   ├── 90-365 days: Commercial Paper
   └── > 1 year: Bonds

2. Risk Tolerance
   ├── Conservative: Government T-Bills
   ├── Moderate: Investment-grade corporate
   └── Aggressive: High-yield bonds

3. Income Needs
   ├── Lump sum: Discount instruments
   └── Regular income: Coupon bonds

4. Currency Preference
   ├── Local: Avoid FX risk
   └── USD: International exposure

Pool Comparison Tool

Comparing Two Pools:

Nigerian T-Bill          |  US Treasury
-------------------------|-------------------------
Return: 18%             |  Return: 5.5%
Risk: Low (Sovereign)   |  Risk: Lowest
Currency: cNGN          |  Currency: USDT
Min: ₦10,000            |  Min: $100
Duration: 91 days       |  Duration: 90 days
Tax: Withholding 10%    |  Tax: None
Net Return: 16.2%       |  Net Return: 5.5%

Technical Details

Smart Contract Interactions

User → LiquidityPool Contract
├── deposit(amount, receiver)
├── withdraw(assets, receiver, owner)
├── redeem(shares, receiver, owner)
└── balanceOf(user)

LiquidityPool → Manager Contract
├── handleDeposit()
├── handleWithdraw()
├── calculateTotalAssets()
└── processInvestment()

Manager → Escrow Contract
├── lockFunds()
├── releaseFunds()
├── withdrawForInvestment()
└── trackReturns()

Security Features

Multi-Layer Security:
├── Audited Contracts (Quantstamp)
├── Multisig Escrow
├── Time-locked Operations
├── Emergency Pause
├── Role-based Access
└── Slippage Protection

Frequently Asked Questions

Q: What happens if the pool doesn't reach its target?

If < 50% of target:
├── Pool enters EMERGENCY status
├── All funds returned
├── No fees charged
└── Try another pool

If ≥ 50% of target:
├── Pool proceeds with amount raised
├── SPV invests what's available
└── Returns proportional to investment

Q: Can I add more money after initial investment?

During FUNDING: Yes, anytime
After FUNDING: No, pool is closed
Alternative: Buy shares on secondary market

Q: How often can I withdraw returns?

T-Bills/Commercial Paper: Only at maturity
Bonds with coupons: 
├── Coupons: As they arrive (auto-added)
├── Principal: At maturity
└── Or: Sell on secondary market anytime

Q: What if the issuer defaults?

Government Securities: Extremely rare
├── Historical default rate: <0.1%
├── Recovery process exists
└── Risk disclosed upfront

Corporate Securities:
├── Credit ratings indicate risk
├── Higher returns compensate
├── Diversify across issuers
└── Insurance products coming

Best Practices

For New Investors

  1. Start with government T-Bills

  2. Invest small amounts first

  3. Understand the timeline

  4. Set calendar reminders for maturity

  5. Reinvest for compound growth

For Experienced Investors

  1. Build laddered portfolios

  2. Mix durations and instruments

  3. Use secondary market strategically

  4. Participate in syndicates

  5. Optimize for tax efficiency

Pool Selection Checklist

  • [ ] Verified SPV with track record

  • [ ] Reasonable return for risk level

  • [ ] Matches your timeline

  • [ ] Minimum investment comfortable

  • [ ] Currency exposure acceptable

  • [ ] Understand fee structure

  • [ ] Read instrument details

  • [ ] Check issuer ratings

This is living documentation. Pool mechanics may evolve with new features and optimizations.

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