# Create position tokens

The lifetime of position tokens starts with the creation of a so-called contingent pool. A contingent pool is a smart contract that, upon collateral deposit, issues two types of tokenized shares, long and short position tokens, with directionally reversed payoff profiles. Combined those position tokens represent a claim on the deposited collateral. In isolation, however, they expose the user to the up- or downside of the asset. 

The collateral is held inside the smart contract until any of the below actions occur:

* User sends back an equal amount of both long and short position tokens
* User redeems long or short position tokens after the payout per long/short token has been set

The payoffs per long and short position tokens are determined contingent on the outcome of an external event that a user specifies at the time of the contingent pool creation. 

To create a contingent pool / position tokens, a user would need to specify the following inputs: 

* :chart\_with\_upwards\_trend: **Event**: the outcome, defined by a metric and an expiration date, that the position tokens derive their value from
* :moneybag: **Payoff profile**: the parameters governing the shape of the payoff curves
* :dollar: **Collateral asset**: the asset (ERC20 token) that backs the value of the position tokens
* :crystal\_ball: **Data provider / Oracle**: an Ethereum address that is supposed to report the final value of the reference asset following expiration  

Learn how to create a contingent pool in our [DIVA App Training](https://docs.divaprotocol.io/diva-app/pages/NBlNZa5OrXsIyvWKdvM4#b.-create).


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