⚙️How it Works?

Funding Mechanisms

The Insurance Fund is fueled through:

• Protocol Fees: A fixed portion of interest rates and liquidation fees

• Penalty Allocations: A share of funds from liquidations

• DAO Reserves: Treasury allocation voted in by governance

• External Contributions: Optional community or institutional funding

Activation Conditions

Insurance is only triggered under certain verified and critical scenarios:

• Smart Contract Exploits: Confirmed security breaches

• Oracle Failures: Manipulation or corruption of price feeds

• Protocol Insolvency: If liquidations fail and debt remains uncollateralized

Payout Logic

• Losses are assessed and verified by the protocol or a designated security council

• The Insurance Fund can automatically or manually (via governance) disburse funds

• Payouts are proportional to individual user losses, using a snapshot of positions before the incident

Rate of Refill

• A variable percentage of platform revenue replenishes the fund over time, governed by the DAO