Insurance Pool

The Insurance Pool insures the protocol, and thus all Synth users, against Black Swan events and protocol exploits.

The Insurance Pool will be live between Beta v3 and Protocol V1 launch. For all earlier versions of the protocol, Insurance Pool funds will be custodied by a multi-sig Gnosis SAFE wallet.

Insurance Pool

The Insurance Pool, designed to protect the Global Hedging Pool against Black Swan events and protocol exploits, draws funding from three key sources:

  1. The protocol's initial token allocation (210M UMJA tokens).

  2. USDC staking, where stakers earn uUSD, which generates an APY from redistributed protocol revenues.

  3. Half of the Synth fees collected by the protocol (excluding trading fees from Synth positions).

With 21% of all UMJA tokens allocated to the Insurance Pool in V1, plus ongoing revenue contributions, the pool is structured to minimize the risk of depletion.

How does the Insurance Pool work

The Insurance Pool functions as follows:

  1. Insurers (i.e., Umoja Stakers) stake USDC to the Insurance Pool receive pro-rata APYs via uUSD.

  2. Insurance Pool tracks the Global Pool's collateralization ratio & market prices to proactively protect against black swan events.

  3. Global Pool receives coverage in the event of a black swan event.

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