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Custom Pool Creation

Weird Pools​

When creating a pool directly without interacting with the Market Manager contract, pool creators should be extremely careful while configuring the parameters of the pool.

Tenor’s pool manager allows for the creation of "weird pools". Although these pools are not useful for swappers—and may even result in loss of funds—their creation is not outright forbidden. The protocol permits their creation as long as they do not cause unexpected issues in other pools. Examples of "weird pools" include:

  • A pool whose maturity date differs from that of the Fixed Token.
  • A pool where the ERC20 or ERC4626 Loan Token does not match the Fixed Token’s redemption asset. For instance, listing a PT-USDC Fixed Token against ETH as the Loan Token instead of USDC.
  • A pool using rebasing tokens.
  • A Fixed Token or Loan Token with an amount of decimals that can be updated.
  • A pool using an ERC777 token as its loan token.
  • A pool using a Fixed Token that can be redeemed on behalf of its owner. For example, Term Finance Repo Tokens can be redeemed for their underlying asset by anyone after maturity, which would result in the Pool Manager receiving the underlying asset after maturity and then having the tokens stuck in the PM contract.

Within Tenor Markets, the Market contract itself will initialize pools in the Pool Manager. This means that in the context of Tenor only the market can list new pools, which mitigates the risk of weird pool creation. In the context of Tenor, pools will have these properties:

  • Pools share the same maturity date as the Fixed Token.
  • Pools use an ERC4626 token that matches the Fixed Token’s redemption asset.
  • The ERC4626 share-to-asset exchange rate remains stable when minting shares or depositing assets (i.e., no slippage occurs) and the exchange rate is monotonic.
  • The Fixed Token can only be redeemed outside of the Pool Manager, meaning it cannot be settled on behalf of the token holder.

ERC 4626 Tokens Fees​

ERC-4626 tokens should not have any fees upon redemption leading to a different result than convertToAsset.

Principal Tokens​

The fixed token can be a PT. The exchange rate takes into account the current tick, the maturity, and the loan asset's share price (if the loan asset is an ERC4626 vault). However, it always values the PT token as redeemable 1-to-1 with its underlying.Note that this is not true for most PT protocol implementations (Pendle, Napier), they cache the share price and always use the highest one seen (meaning, redemption leads to receiving fewer vault shares): If the PT's underlying vault's share price drops and does not recover at maturity, the PT is redeemable for fewer underlying. Its redemption price is less than 1.0 but Tenor will still value it at 1.0, leading to arbitrage. Traders can sell these PT tokens into Tenor at a better price, the LPs end up with all PT inventory and take the loss when redeeming at the PT protocol side.

Pauser​

If the Pauser role is set to the zero address, the unpausable state is temporary as a new pauser can be added as long as the pool manager's owner controls their account.

Unclaimable Incentives​

The PoolManager owner can’t claim incentives that accrue to tokens held in pools. In the context of Tenor Markets, any incentives accruing due to the deposits in an underlying money market will accrue to the Loan Token contract itself. Only the receipt tokens from Tenor Markets will be used to swap via the PM.