For us, June has been one of the most productive months so far. Here is a quick summary of what happened during that month.
DAO Smart Contracts Development
We’ve made significant progress on the DAO Smart Contract development. Without diving too deep into the topic, we’re covering only a few protocol contracts here:
Cover and CoverBase Contracts
The cover contract enables anyone to create and update their cover contracts. When you create a new cover, a dedicated Cover Vault contract gets automatically deployed for managing liquidity. More information on the Vault and VaultPod contracts below.
Staking Contract, Cover Fee, and Redemption
To add a new cover, you need to pay 1000 NEP as the cover creation fee and lock a minimum of 4000 NEP in the staking contract. Through the governance portal, projects can redeem up to 100% of the paid fee at a later date.
How to Apply for Fee Redemption?
As a cover creator, you benefit by earning up to 1% of the cover fees in the pool indefinitely. You can specify the rate (one-time setup) when you create a new cover contract.
Read the documentation to learn more about the fees:
NEP Provision Support for Liquidity Providers
The governance portal enables DAO members to provision NEP tokens as Liquidity Pool Support for any given cover. We believe this will foster community participation and will also incentivize liquidity providers. The NEP provision acts as a defense mechanism during cover incidents. Along with the NEP provisions, the liquidity providers also have Cover Assurance Support for a rainy day.
Based on the available liquidity, the provision contract will contribute up to 25% of the suffered loss back to the liquidity pool.
Cover Assurance Support for Liquidity Providers
When you create a new cover, you can assign any ERC-20 (or BEP-20) token as an assurance token.
In other words, cover creators can add assurance tokens to prove their support for the cover they created. The assurance token liquidity reduces cover fees, pays liquidity providers during cover incidents, thereby boosting the liquidity provider confidence. Along with the NEP provision token, the assurance tokens are also awarded as a support to the liquidity providers when a cover incident occurs. Without affecting the price much, the protocol will gradually convert the assurance tokens to a stable-coin liquidity.
Based on the available liquidity, the assurance contract will also award up to 25% of the suffered loss back to the liquidity pool.
Liquidity providers can earn fees by adding stable-coin liquidity to any cover contract. The cover fees and lending incomes get accumulated and compounded to Cover Vault periodically. The liquidity providers collectively own the Vault.
- Cover fees paid in stable-coin get added to the liquidity pool on finalization (or maturity).
- The protocol supplies a small part of idle assets to lending protocols (from v2 onwards).
- The protocol also enables flash loan borrowing; the received interest gets added back to the pool (from v2 onwards).
- To protect liquidity providers from cover incidents, they can redeem up to 25% of the cover payouts through NEP provision.
- To protect liquidity providers from cover incidents, they can redeem up to 25% of the cover payouts through assurance token allocation.
Vault PODs (Proof of Deposits)
The Vault contract has _mintPods and _redeemPods features that enable POD minting and burning on demand. As soon as you add liquidity to the Vault, the protocol mints and sends you the POD tokens back. These POD Tokens represent your proportional share of the pool. Similarly, when you redeem your PODs, you get your proportional share of the Vault liquidity back, burning the PODs.
When you buy a cover, you receive an equal amount of a special token called “cTokens”. You need the cTokens to claim for payouts when resolution occurs. Each unit of cTokens is fully redeemable at a 1:1 ratio to the protocol stable-coins (like wxDai, DAI, USDC, or BUSD) based on which chain you’re using.
And a lot, lot more …