Pooled Lending

CONFIDENTIAL & PROPRIETARY © 2025 Inkwell Finance, Inc. All Rights Reserved. This document is for informational purposes only and does not constitute legal, tax, or investment advice, nor an offer to sell or a solicitation to buy any security or other financial instrument. Any examples, structures, or flows described here are design intent only and may change.

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Overview

Leviathan’s pooled lending system, managed by the leviathan-pool Solana program, allows lenders to supply capital to shared pools rather than funding individual loans directly. In return, lenders receive LP tokens — fungible receipt tokens representing their proportional share of the pool. This model provides lenders with diversified exposure across multiple borrowers, predictable yield mechanics, and the ability to enter or exit positions through standard token transfers.

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How It Works

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Depositing

1. A lender deposits capital (e.g., USDC) into a lending pool
2. The pool mints LP tokens proportional to the lender’s share of total pool value
3. LP tokens are standard SPL tokens — they can be held, transferred, or used in other DeFi protocols

The exchange rate between LP tokens and the underlying asset increases over time as interest accrues, meaning LP tokens appreciate in value relative to the deposited asset.

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Withdrawing

1. A lender redeems LP tokens against the pool
2. The pool burns the LP tokens and returns the proportional share of pool value
3. The returned amount includes the original deposit plus accumulated interest, minus any losses from defaults

Withdrawals are subject to available liquidity — if most pool capital is actively deployed in loans, withdrawals may be partially filled or queued until capital returns.

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Interest Rate Models

Pool yields are determined by utilization-based interest rate models:

• Utilization rate — the percentage of pool capital currently deployed in active loans
• Base rate — the minimum interest rate charged to borrowers, even at low utilization
• Slope — how quickly rates increase as utilization rises

When utilization is low, rates stay near the base to attract borrowers. As utilization increases, rates rise to incentivize new deposits and discourage excessive borrowing. This creates a self-balancing mechanism that manages pool liquidity.

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Yield Strategies

Idle capital sitting in the pool (not deployed to active loans) can be put to work through yield strategies:

• Pool administrators can configure approved yield sources for undeployed capital
• Strategies are subject to the same policy and risk controls as loan deployments
• Returns from yield strategies accrue to the pool, benefiting all LP token holders

This ensures that capital waiting for loan deployment still generates returns, improving overall pool efficiency.

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Pool Accounting

The pool program maintains precise accounting of all capital flows: All accounting is on-chain and verifiable. LP token holders can inspect pool state at any time to understand their position.

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Risk Isolation

Each lending pool operates independently:

• Separate risk profiles — pools can target different borrower segments, credit tiers, or use cases
• Independent parameters — interest rate models, utilization targets, and yield strategies are configured per pool
• Isolated losses — defaults in one pool do not affect other pools

This allows the protocol to offer pools with different risk/return characteristics. A conservative pool might only lend to top-tier borrowers at lower rates, while a higher-yield pool might accept broader credit profiles with higher compensation for risk.

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LP Token Properties

LP tokens have several important properties:

• Fungible — all LP tokens for the same pool are interchangeable
• Appreciating — the exchange rate against the underlying asset increases as interest accrues
• Transferable — LP tokens are standard SPL tokens that can be transferred, traded, or used as collateral in other protocols
• Redeemable — LP tokens can always be redeemed against the pool, subject to available liquidity