While this seems like a simple solution, there are a few complicating factors that make a two capital pool solution nearly impossible, imo.
NXM Token. The NXM token is backed by assets held in the capital pool, whether it’s 100% ETH, 50% ETH and 50% DAI, or any other combination of LSTs, ETH, DAI, or any other token. Isolating two pools and splitting between ETH (i.e., native ETH, LSTs, or any other yield-bearing ETH token) and DAI (i.e., any stablecoin or yield-bearing stablecoin token) would require two tokens if members want to choose their desired asset exposure. Because the NXM token plays a fundamental role within the protocol, this would have far reaching implications and would likely require significant development work.
Cover Demand. Right now, the vast majority of the mutual’s cover is DAI-denominated, and that tends to be the case in bear market conditiions. During bull markets, the mutual sees the majority of cover denominated in ETH. If we shifted to a two capital pool model, the mutual would then need to bootstrap the DAI capital pool. Since most of the current demand is for DAI-denominated cover, this would severely restrict the mutual’s core business, as many cover buyers want to buy protection in a stable asset. This would likely impact the flow of capital into the mutual through cover sales at a time when new staking pools are launching and members are building distribution networks on top of the protocol.
Capital Efficiency. Splitting the capital pool into two distinct pools also impacts the overall capital efficiency the mutual can acheive in the long-term. The goal of pooling all the mutual’s capital into one contract is to enable the greatest capital efficiency possible as cover sales scale over time. This leads into the next point.
New Tokenomics. As @Rei and the R&D team work to finalize the racheting AMM model for the new tokenomics, members will begin discussing the amount of liquidity that will be supplied to the virtual AMM in the planned new tokenomics. The sentiment in the Request for Comment - Tokenomics Design Detail thread is to allow any redemption of NXM for ETH and no other asset. Any other changes to NXM’s tokenomics would likely impact the timeline for the new tokenomics plan, and I’d wager that members would like to have the new tokenomics plan implemented before any further decisions are made about capital pool assets, whether it be further diversification to make a larger portion productive or to better match assets and liabilities.
I’m not a fan of a two capital pool solution, as the mutual was established with a capital pool that held both ETH and DAI. At this point, I’d be in favor of talking about diversification tranches when the price of ETH hits certain benchmarks, so members can capture the upside and hedge against potential price downside. If done correctly, a diversification strategy that happens over time with predefined goals can allow members to maintain the potential upside of ETH price movements, while better matching DAI-denominated cover exposure.
When ETH was more than double the current price, members also discussed a potential diversification into DAI, which was roundly dismissed since the vast majority of members were long-term bullish ETH. While I’m sufficiently bullish, it seems prudent to find a reasonable path to diversify over time and prepare for a future where crypto-native coverage isn’t the only product members are underwriting and distributing.
Now that V2 is live, there’s a whole market of potential risk (i.e., real world risks) that members can underwrite where the vast majority of cover will be denominated in DAI and we could see a significant increase in annualized fees from these new lines of business.