[Backstop/Insurance/SAFU – whatever you want to call it]
“contribute 10% of our company tokens from Unlock 1 into a pool specifically to create a SAFU-like/insurance fund/system backstop, one designed to incentivize more lenders. It’s still TBD the structure that this will take and we’ll be engaging the community for proposals of how this could ultimately be self-sustaining.”
Now, here I am engaging the community for proposals of how this could ultimately be self-sustaining
Some ideas/comments/observations to get the discussion started:
- I believe we want the insurance pool to be comprised of assets besides just $TRU
- I believe we want the backstop fund to be self-sustaining
- It would be interesting if the backstop fund could grow by yield farming/earning yield, either in TrueFi or other protocols
- I’m interested in DerivaDEX’s insurance mining program (Blog Post 1, Blog Post 2, Docs) to bootstrap the protocol’s insurance fund. As of writing, they have $40.6mm USD staked. As I understand, people stake USD-assets, earn DDX token for 1 year and if in the span of 1-year there is a big liquidation, the USD-assets would be drawn down. But after 1-year, presumably these people will unstake and then the DerivaDEX insurance fund capitalization needs to come from other places (in their case: liquidations and fees)? DerivaDEX’s governance could extend the staking rewards past 1-year and then the insurance mining could continue.
- Given how many unallocated incentives we have for TRU (on the low end, 13mm… on the high end: 65mm) this is a possibility for us too
- Staked USD assets could leverage Yearn Vaults + (Coverage from NXM/Cover) for yield, insurance fund retains accrued yield which then acts as “PCV” or Protocol Controlled Value.
- Could you stake TRU/ETH LP tokens in the backstop fund so that users are both providing liquidity and offering a backstop (which is farming TRU)