> For the complete documentation index, see [llms.txt](https://docs.efficientdex.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.efficientdex.com/how-pools-work.md).

# How pools work

The mechanics every Efficient pool shares: its book, its hooks and the price feed a pool with a price band reads. Lending markets add just-in-time financing, and borrowing adds the credit check.

Every Efficient pool values its shares in one token, the pool asset. It trades the pool asset against the other token in its pair, and its hooks price every fill. A pool that can borrow also borrows that other token from lending markets when a sell needs it.

For example, take an Efficient pool that trades BTC against USDC, where depositors have put in only BTC. BTC is its pool asset, and USDC is the other token in its pair.

Every pool the factory creates runs the same pool code. So these mechanics hold for any hooks its pool operator chooses. Any pool can connect lending markets, but none has to. Financing applies only to pools that connect them, and collateral only to pools that borrow.

[How Efficient works](/how-efficient-works.md) gives the one-page overview. The pages below cover each part in detail.

* [The pool and its book](/how-pools-work/the-pool-and-its-book.md) follows the book through an entry, a sell, a buy and an exit. It shows how net asset value sets each share's value.
* [Hooks](/how-pools-work/hooks.md) covers the three required hooks, the two optional ones and what they decide. It also explains loan-to-loan swaps, the fee bounds on every fill through `swap`, and the price band where a pool has one.
* [Price feeds and oracles](/how-pools-work/price-feeds-and-oracles.md) explains the USD price feed that a pool with a price band reads. It also covers the feed's staleness, peg and sequencer checks. For a pool with a lending market, it shows how that market's oracle sits beside the feed.
* [Just-in-time financing](/how-pools-work/just-in-time-financing.md) covers how a pool with lending markets uses them. It explains the financing router, venues, the tokens a pool can borrow and the funding orders. It also covers the execution buffer the pool holds on both sides of its pair.
* [Credit and collateral](/how-pools-work/credit-and-collateral.md) sets out the LTV pin, the credit check, the limits on new borrowing and collateral top-ups. All of these apply to pools that borrow. The page also covers the emergency calls on a pool's lending markets.