> For the complete documentation index, see [llms.txt](https://cvnnt.gitbook.io/documentation/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://cvnnt.gitbook.io/documentation/faq/non-custodial-system-pools.md). # Non-custodial system pools Non-custodial system pools are pools of assets (e.g. BTC) on integrated networks that are operated programmable by the Covenant system. Non-custodial pools are used to provide users with the opportunity to trade cheaper when the same asset return is not logically required - e.g. in buy / sell operations. Covenant is a distributed on-chain system that doesn't have manual management and is safe from manual interruption or trusted or off-chain parts. Covenant system pools are non-custodial and are managed by smart contracts. Think of the system pool as of the multi-party automated channel or multi-party secure vault. Rules are generally the same. Users of the pool have their stateful ownership receipt on amount of the pooled assets that they can trade, lend, borrow, transfer and withdraw on their demand, just as self-custody vaults users have. ### Pools comparison with self-custody deposits The main difference between pooled asset and self-custody deposit is that self-custody deposit allows to withdraw the exact same asset that was deposited. This is particularly useful in staking or collateral scenarios, where the ownership transfer is not required and not desirable. Self-custody users are required to pay self-custody maintenance system commission. Pools are used for operations when ownership transfer scenario is intended - like buy or sell operations. Pools allow traders to save on commissions as pool users don't pay self-custody maintenance fee. **Pools and self-custody deposits are not the opposite approaches**, instead, they are interchangeable at the general point: * Pooled asset can be bought and moved to self-custody deposit; * Self-custody asset can be sold or bought. ### 1:1 backing There can be no more or less assets in the pool than the overall amount stated in all Covenant system channels - pools have 1:1 peg with synced assets.
Are system pools managed by people? No, system pools are managed on-chain by smart contracts.