As a capital pool enhanced insurance protocol, we will be bootstrapping, maintaining, and augmenting the liquidity pool by staking. Below is a quick glance at the staking interface in the app.
There will be 6 pools available on day 1, including ETH, WETH, DAI, USDT, USDC, and INSUR with different weightages for each pool.
We want to build up a solid capital pool with diversified staking assets, and more tokens will be incorporated into the list after phase 1 on mainnet.
As a first step, a limit will be set on the pool to ensure that we can adequately handle the locked asset and manage the platform in a secure manner. Therefore, we plan to accept an initial TVL of $20,000,000 as a staking limit, and the cap for each pool can be calculated according to the weightage above.
The rewards for the staking will be INSUR tokens calculated at a per-block level according to the per-block reward configured. The rewards can be unlocked any time, but subject to per-block linear vesting over 15 days.
There will be competitive APY for staking on InsurAce, which will be subject to the change of the INSUR token prices and may be adjusted accordingly. The community will be notified of any changes in advance. The APY can be adjusted by tuning the RewardPerBlock parameter in the smart contract.
Users can stake and unstake their asset any time, but unstaking will be subject to a 30-day (configurable) lock-up period until it will be fully withdrawable, which is to ensure the sufficiency and liquidity of the capital pool in the event of potential claim payout, a commonly adopted practice in insurance protocols. However, stakers will still be entitled to rewards during this 30-days lock-up period.
There are also minimum and maximum caps per each staking transaction to prevent the concentration risk as illustrated in the table below. This will be regularly reviewed as prices fluctuate.
Unstaking will be subject to a fee set at 0.1% to prevent frequent unstakes which might flood the system.
Based on the TVL cap of $20M in the initial phase, assuming average APY of 30%-50% when cap is hit, and INSUR token price at $5.0, the released token per block will be between 0.57 and 0.95 respectively, which amounts to 1.2M to 2.0M tokens released annually.
Unlike staking on other types of DeFi protocols, insurance protocol staking has more risks. Please be noted that your staking may be subject to financial loss if there is a claim approved. Claim payouts will be deducted in a tiered structure, in which 20% of the total premium pool will work as the 1st tier, and the staking pools will be the 2nd tier if the premium pool is not sufficient to cover the claimed amount. The claimed amount will be deducted from the staking pool on a pro-rata basis.
To understand more about the risks of staking, kindly refer to the next segment on the risk of staking.