Native stable coin and insurance pool

Name of Project

DeCover

Ticker for Token

Dcvr

1) In one sentences or less, describe your token. This isn’t the time to get wordy, just to the point!

a stable coin yield farm pool designed as an insurance pool

2) Do you have a video to introduce yourself or explain the token? Upload it here and share the link here. (Not required)

N/A

3) Do you have a logo for your token? If so, upload it here. (Not required)

4) How does your token work? Be as detailed as possible

The intention of this project would be to allow people to “insure” their participation in defi projects, I believe this project should only be available to block zero citizens as that would incentivize people to becoming members.
my idea is two stepped, firstly I believe a creation of a native stable coin is necessary and rather than having this stable coin backed by usd I would like to see it backed by BTC, with the fund having to balance its balance of tokens in circulation against its holdings of BTC. Ideally I’d like to see such a token pegged to the price of 1000satoshis either statically (a snapshot of the value of a 1000satoshis at a given period) dynamically the value of 1000 satoshis as predicted by a long term model like S2R, or simply pegged to the value of 1000 satoshis constantly trailing the value of BTC although I think that may be hard to achieve.

edit perhaps if the idea was to have the stable coin function as currency within the blockzero citizen ecosystem, the key would not be to have it pegged to the dollar but rather to be backed by btc and pegged to the value of btc, so as to provide essentially a second layer solution for btc to act as money.

the protocol for such a token would have to be POS as high tps capabilities and smart contracts would be needed for the token to be able to function within the block zero ecosystem as “money”

the second part to this idea would be to open the ability for block zero citizens to participate in an insurance fund. Where citizens can denominate a stake to the pool under smart contract to in turn gain access to insurance against adverse events for their investments.
The idea being that the pool would seek low risk, long term yield farming opportunities through the DeFi system to generate profits across the total sum of Decover within the pool and rather than redistribute those earnings to liquidity providers, the interest is compounded, growing the fund to be able to cover peoples claims.

I would suggest that a structure exists in the same way of traditional insurance. with participants entering a smart contract which provides an agreed cover amount, an initial deposit by the participant and and agreed quarterly premium.
In my opinion, the capital assigned in the deposit should be refundable where by the small premium provided is a fee for maintaining cover.

edit perhaps a few solutions to the insurance pool being exploited would be to have the insurance pool function as a DAO with proof of stake voting allowing members of the pool, or an assigned committee to vote on the legitimacy of claim. or if an oracle service was used to white list projects that are insurable under the pool.
5) What problem is your token aiming to solve? How will this positively impact the crypto industry?

To help onboard citizens and participation in block zero projects by allowing citizens to hedge their risk through insurance

6) What was the inspiration of this token? How did you think of it?

A conversation had on another part of block zero forums with poster XID-3e6B4

7) Are there any projects out there doing something similar?

I’m not aware of them if they are

8) What phase is the token in? Explore vs. Build vs. Launch vs. Scale. (If there has been no coding yet, your token is in the explore phase)

n/a

9) Will this token be inflationary, deflationary, fixed, or dynamic token supply?

stable coin

10) How long do you think it would take to build a minimal viable token?
I have no idea

11) What skills do you have that would help bring this token to reality? (ex: Marketing, Development, Branding, etc)

project management, just kidding. I’m a project manager in the resource industry I have background in finance or IT

12) Are there any inherent weaknesses or obstacles to building this token? Any items you still need to figure out?

The biggest issue I see is in pegging a stable coin that is backed in BTC, the volatile nature of BTC makes this proposition difficult, but as a person who has been watching, learning and investing in crypto projects since 2016 I would love to see this sort of ecosystem detached from FIAT

I suppose onboarding becomes an issue if the project is pegged to usd however if the project was pegged to the value of BTC, even if payment is taken by the “mint” in BTC future growth of btc would mean that previously minted DeCover is under collateralized.

Another issue would be vulnerability to exploits from bad actors, for example if the devs of a project intended to exit scam they could also seek to claim insurance from the pool. I don’t know how this issue could be solved without using human claim authenticators and investigators. perhaps the fund could be insured through traditional insurance? there by outsourcing that process and only requiring oracles to identify potential anomalous claims

If you want to share your Twitter/Telegram handle here for people to reach out and discuss this idea with you, post them below.

This is where you can put anything you want that was not directly asked above! Anything and everything related to your token idea can go here. Any files, links, info, etc

1 Like

Excellent start. One off premium covering a certain period of coverage will be better than requiring a commitment for a repeated/recurrent payments though.

1 Like

for sure a one off premium is preferable from the standpoint of the consumer, it would also be cheaper to implement smart contract wise.
but trying to keep in mind that enterprise to succeed needs to be profitable I thought that a fee’d structure in the defi sector would still be attractive to participants.
I.e If I chose to participate in a liquidity program on a white listed project like for arguments sake lets say pancake swap with an aggregate apy for 34%, in less than 26months my principal would have been repaid assuming compounding.
so, I could chose to insure my principal over 5 quarterly periods.
assume that nothing happens during that 26months, I withdraw the equivalent of my principal from pancake swap, enjoy a risk “free” income stream from pancake swap and cancel my insurance through DeCover, releasing my deposit. the premiums paid and the capital gains accrued by the pool stay as the pools profits.

I mean this is necessary if the project was to function like more traditional insurance where by the insurer has the resources to investigate and protect itself from bad actors.

edit: actually I can see your point, and I think this could be incentivized, maintaining a more complex smart contract could be more taxing and providing more liquidity up front would be more beneficial for the pool anyways.
maybe an option to chose a fixed period of cover by paying upfront premiums could be incentivized by either reducing participants required stake or by discounting the premium fees

As said earlier, great project proposal indeed. However, will this fit in with the development time of no more than 3 months that BlockZero has?

1 Like

By the way, would not DISCOVER be a more catchy name?

I wouldn’t imagine so, setting up a yield farming pool that works as a self compounding fund would just be some copy pasta.
however setting up functionality that would allow the pool to function as an insurance fund for the participants would require smart contracts, and that would require the project to be built on a web3 network like ether, dot, avalanche etc. Also my understanding of smart contracts and their limitations is well, limited so I’m unsure how complex such a system would be to set up.

the currency backed by btc reserves would be relatively easy to create I think, I wonder if chainlinks off chain oracle services going live could be utilized here as audit for the reserve. Maybe the reserve could participate in the insurance pool as a means of yield for the project.

I guess the positives here as the whole project could easily be modulated with individual parts of the project being viable in and of them selves.

i.e:

  1. creating a mint, BTC reserve as custodian of btc deposited for the currency.
  2. creating a yield farm pool that compounds interest instead of redistributing yield to lp’ers (as an intermediary step this could be some how incentivized for participation. much like the xio community growth fund)
  3. creating utility within the yield pool to allow it to function as an insurer

I am by no way attached to the name DeCover, and discover is certainly a good name!