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How is YFI's DeFi insurance configured?



Starting from loan aggregation, YFI started the expansion of its DeFi "empire". In addition to providing stable currency aggregation and mining aggregation, YFI began to set its sights on DeFi insurance. DeFi insurance is an indispensable field for the development of DeFi.

According to YFI founder Andre Cronje, YFI’s insurance consists of three core components:

1. Underwriter's Treasury

2. The insured's treasury

3. Claims Governance

It is very simple to become an insurer, no KYC or others are required, just deposit specific funds into the "insurer's treasury". The first insurer's treasury is the yiUSDC treasury, and users deposit USDC to get yiUSDC. Anyone who deposits USDC into the treasury can become an insurer. What are the benefits of being an insurer? Can earn insurance initiation fees and weekly fees paid by the insured.

YFII fell below the $3,000 mark with an intraday drop of 1.36%: OKEx data shows that YFII fell short-term and fell below the $3,000 mark. It is now at $2,998.5, with an intraday drop of 1.36%. The market fluctuates greatly, so please do a good job in risk control. [2021/4/18 20:32:04]

Of course, the insurer has obtained benefits, but also has obligations: if the claim is approved, USDC will be deducted from the treasury and paid to the claimant. In other words, yiUSDC not only represents the income of the insurer, but also represents the obligation of the insurer.

Similarly, there is no need for KYC. The insured can become the insured and obtain insurance services by depositing the insured funds into the "insured's treasury". For example, if a user wants to insure their CRV assets, then the user deposits it into the insured's treasury, and generates yiCRV after depositing. When depositing into the "insured's treasury", a 0.1% start-up fee is required, and at the same time, a 0.01% fee will be deducted every week.

MakerDAO launched a vote on raising the debt ceiling of YFI-A, ZRX-A, and COMP-A: According to the official blog, the MakerDAO governance facilitator has incorporated the governance vote into the voting system on behalf of the MakerDAO risk team. The voting content-ethexc is as follows: 1. Increase the maximum debt limit of YFI-A from 45 million DAI to 75 million DAI. 2. Increase the maximum debt limit of ZRX-A from 5 million DAI to 10 million DAI. 3. Increase the maximum debt ceiling of COMP-A from 10 million DAI to 30 million DAI. [2021/3/30 19:27:33]

The insured can withdraw CRV at any time, or deposit more CRV. The amount of user insurance is the amount of CRV deposited. This kind of insurance service has no fixed term and has greater flexibility.

YFI fell below the $29,000 mark: According to data from Huobi Global, YFI fell short-term and fell below the $29,000 mark. It is now trading at $28,995.37, with an intraday drop of 0.04%. The market fluctuates greatly, so please do a good job in risk control. [2021/1/27 13:38:13]

In the event of a claim event, claims governance is required. In the example above, the insured makes a claim by staking yiCRV. Underwriters vote with their yiUSDC. During the 3-day voting period, 33% approved and 25% rejected.

Assuming the claim is approved, yiCRV will be allocated to the insurer of yiUSDC, and USDC will be paid to the insured.

The design of this mechanism is relatively flexible. It can insure various assets, which can be basic assets (DAI) or compound assets (yDAI).

Underwriters get coverage initiation fees and weekly fees, and they are also responsible for claims management. If the insurer rejects a valid claim, the insured moves their funds out. This means that the underwriter is not profitable. The first insurer’s treasury is USDC, and the first insured’s treasury is yUSD (wrapped yCRV) from yVault.

At present, Nexus Mutual insurance requires KYC. In encryption insurance, there are certain thresholds. However, YFI’s DeFi insurance does not require KYC, and the insurer and the insured can realize the insurance relationship by pledging assets. Of course, the specific details of the claim management here have not yet come out, and the game has not been practiced so far, and the specific effect is unknown.

However, YFI's insurance represents the development direction of insurance in the DeFi field. In the future, new insurance mechanisms will surely emerge. For now, YFI insurance exploration is one of the most active-ethexc explorations in the DeFi field.

Blue Fox Notes has also paid attention to YFI before. The possibility of YFI lies in the possibility of its founders and community. The founders and the community have been moving forward, iterating step by step according to the development needs of DeFi. This iteration itself has various possibilities. It is like a razor, shaving off all unreasonable things and building something that may be more convenient. This may be one of the important driving forces in the history of DeFi development.

In addition to stable currency loan aggregation, mining aggregation, and DeFi insurance, YFI may also involve liquidation, leverage, and transaction aggregation in the future. If it can continue to iterate steadily (and can withstand various risk attacks), YFI will eventually capture the large-scale value of the DeFi field and become one of the most important projects in the DeFi field.


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