[Company Watch] Ruler + Cover, the Wild Card of Defi

  • You still need to collateralise. Putting down 1 ETH will allow you to borrow 750 DAI.
  • There’s no liquidation mechanism. If ETH falls below 750 (in this case, by end of March), you can walk away with the DAI you borrowed and forfeit the ETH.
  • You are given a pair of tokens (if you borrow 750 DAI), 750 rc tokens and 750 rr tokens. Each rc tokens can redeem 1 DAI after end of March, or redeem the collateral. So there’s a market price for rc token, e.g. 95 cents of DAI. This is the amount you can borrow — the moment you sell the rc tokens, its price x 750 is the amount you effectively borrowed.
  • You can repay the debt and get back your 1 ETH any time before end of March, by paying Ruler Protocol 750 Dai and 750 rr token (or partially).
  • Provide liquidity in Ruler Protocol for DAI and rc tokens for WBTC, ETH and COVER underlyings. The yield of this alone is 200% plus. In addition, the yield of holding rc tokens now is about 150%. That gives you a total yield of close to 300% (200% + 1/2 of 150%), although it’s only from now to end of March. The risks are the prices of RULER, and also the Ruler Protocol risks.
  • Provide liquidity in Cover Protocol for the Credit Default Swap. The mining yield now is also close to 300%. The risk is that in the event that the collaterals fall below the initial prices by end of March. If you hold both Claim and NoClaim tokens, you are not exposed to the risks of the default; but as the value of NoClaim token drops, there will be a bit of impermanent losses (likely a few %). On top of that, there’s Cover Protocol risks.
  • Provide liquidity in Cover Protocol for the insurance tokens for Ruler Protocol. This is the same as providing liquidity for insurance of any other projects on Cover. Please refer our earlier articles for details. In the event of default, you are not exposed to the default risks but the value of NoClaim will drop and you will suffer some impermanent loss (likely several %).

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The Serenity Fund

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Zero risk and 20% return - risk neutralised cryptocurrency fund.

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