Risk Sharing Pool

Risk Sharing Pools are designed to protect investors' capital in the event that an Investment Pool underperforms. Underperformance occurs when the cash flows from royalties are lower than expected, leading to a return on investment below the anticipated rate or, in extreme cases, a loss of the invested capital. In such cases, the Risk Sharing Pool mechanism steps in to mitigate or prevent investor losses.

The Risk Sharing Pool is a smart contract where participants can stake $RECORD tokens, earning a yield determined by the protocol's governance (e.g., an APR of 100%). The $RECORD tokens staked serve as risk capital for all active Investment Pools on the protocol, meaning they can be used to compensate investors in the event of capital loss.