Introducing Loanshark’s Isolated Pool Model

Loanshark
3 min readJul 9, 2023

Most DeFi lending protocols currently utilize a shared pool model, where all deposited assets are pooled together into a single liquidity pool. While this model provides capital efficiency by giving the protocol ready access to funds for lending, it also exposes all assets in the pool to the risks associated with any single asset.

This requires protocols to take a conservative approach, limiting the pool to low-risk assets like BTC, ETH and safe stablecoins. As a result, options are limited for those interested in lending or borrowing newer or riskier assets.

Isolated Pools

Isolated pools operate independently, each with their own set of supported assets and parameters.

In a system with isolated pools, users can choose which pools to participate in based on their individual risk tolerance. Since assets are not pooled together, users only need to consider the risks of the specific pool they invest in, rather than the risks of the entire protocol.

More risk-averse users can stick to the main pool of blue-chip assets, while those willing to take on more risk can participate in isolated pools for riskier assets. This gives users more flexibility to lend and borrow based on their preferences.

Isolated pools offer enhanced programmability, seamless integration with new assets, collaterals, and parameters. It strikes a perfect balance between risk and efficiency, resulting in reduced borrowing costs and amplified yields.

Our Plan

Our plan is to take a gradual approach to developing our Scroll-native lending protocol.

Stage 1: In the first few weeks of Scroll mainnet, we will launch with a main hub supporting only BTC, ETH, USDC, USDT and DAI. Enabling lending and borrowing for blue chip assets on Scroll is our top priority.

Stage 2: As the Scroll ecosystem grows, we will begin to assess and support safe partner protocol assets in isolated pools independent from the main hub. This could include yield-bearing LP tokens and their native tokens.

Stage 3: As the primary lending and borrowing hub of Scroll, we will launch a prime brokerage platform to amplify yields on Scroll by maximizing capital efficiency.

Stage 4: Utilizing the isolated pool model, we will launch whitelisted RWA (Real World Asset) pools and also enable permissionless pool creation.

About Scroll

Scroll is a fully EVM-equivalent zk-Rollup built to scale Ethereum. This will enable Loanshark to offer near-instant and cost-efficient transactions while preserving the security and compatibility of Ethereum. The Loanshark team is excited to be working with Scroll!

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