[Company Watch] Cover Protocol

  1. User A deposits a mount of DAI for a protocol. Let’s say User A deposits 10,000 DAI for AAVE. By depositing 10,000 DAI with Cover Protocol, he mints two tokens of 10,000 each. He can redeem the pair of tokens for DAI at any time to rescind this action.
  2. Claim: in the event that a claim is made (see step 2 and 3), the Claim tokens are entitled to redeem 1 DAI each (and noClaim tokens receives none);
  3. NoClaim: in the event that no claim is made, at the expiry of the insurance period (usually a few months), the NoClaim tokens are entitled to redeem 1 DAI each (and Claim tokens receives none);
  4. A claim is a binary situation during the insured period, so the User A either uses Claim tokens to get back the 10,000 DAI, or uses NoClaim tokens, depending on whether a claim is made. A claim is not specific to the User — he does not need to prove that he has a loss of funds from AAVE of any amount to make a claim. Instead, a claim can be made as long as an exploit happens in AAVE and anyone files a claim for the governance to vote and verify. Think it in the traditional finance terms: it’s like a class litigation. This is the basic mechanism of Cover Protocol that’s disruptively different from Nexus and any traditional insurance firms.
  5. The community votes on a claim and if voted pass, a professional committee comprised of blockchain audit firms further verifies the nature of the claim. If passed, the status of the Claim and NoClaim will be updated to reflect that Claim tokens can claim 1 DAI each. If not passed, nothing changes.

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The Serenity Fund

The Serenity Fund

Zero market risk and stable return - risk neutralised cryptocurrency fund.