> For the complete documentation index, see [llms.txt](https://limitless.gitbook.io/rammlend/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://limitless.gitbook.io/rammlend/products/universal-lending-pool/liquidity-efficiency.md).

# Liquidity Efficiency

Under this system, active participation from the managers will allow all lending pools connected to a vault to reach an equilibrium state with similar risk-adjusted returns, which mitigates inefficiencies associated with liquidity fragmentation. 

If one lending pool has a higher utilization rate compared to its risk(high apr vs risk of collateral), managers will redeem(withdraw capital) from another lending pool with a lower risk-adjusted return(either low utilization rate or more risky collateral) and supply to the higher pool. This allows the lending pools to have a completely isolated structure(one collateral per token to be borrowed) without sacrificing much efficiency. 

{% hint style="info" %}
Managers are incentivized to constantly rebalance the pools to maximize their profit, which will also direct capital to instruments that need it most. 
{% endhint %}


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