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Per-contract underwriting

Problem​

In a shared pool where every deposit owns a share of everything, timing is unfair. An underwriter who deposits the day before a large premium arrives shares it with those who carried the risk for weeks. One who deposits the day before a large payout shares a loss on contracts they never chose to back. Share-based pools also need a share price, which depends on how unexpired contracts are valued.

Approach​

Each contract records its funders: the underwriters whose free money was reserved for it, and how much each reserved.

  • At sale, the reserve is split across current backers in proportion to their free money, and the net premium is credited to them in the same proportion, at once.
  • At settlement, the payout is charged only to those funders, in proportion to their reserve.

There are no pool shares. Each underwriter has a plain balance: free, reserved, earned, paid.

Why​

  • Fair by construction. Premium and risk go to the same people, in the same proportions, for the same contract.
  • No valuation of open contracts. Nobody needs a mark-to-model price to deposit or withdraw.
  • Instant withdrawals of free money. Free money backs nothing, so it can leave at any time.
  • Choice. Underwriters can stop backing new sales or limit tenor without leaving.

Trade-offs​

  • Gas and storage per contract grow with the number of funders. The pool caps underwriters at 50.
  • Concentration. If one underwriter holds most of the free money, they back most new contracts.
  • Premium is credited before risk is known. An underwriter can withdraw a premium while still carrying the reserve that earned it. The reserve stays locked, so the pool remains solvent.