AC takes you through the DeFi insurance program Cover Protocol

The text's title appears in the book "Photograph & NBSP;Cover Protocol" (2002).  

原文作者： Andre Cronje，YFI创始人

0x33, rhythmical BlockBeats

律动 BlockBeats 消息，12 月 3 日，YFI 创始人 Andre Cronje 在博客发表了名为《了解 Cover Protocol》（Understanding Cover Protocol）的文章。简单的介绍了 Cover 协议中三种重要的核心角色和其参与方式，另外还提到了在 yearn.finance 的帮助下，Cover协议将会优化用户体验，并将进行三个重要的改进。

The following is the full translation:

It took me a while to understand Cover Protocol. In this article, I will try to simplify what I have learned to help the three core roles in the product better understand and use the product:

· Coverage Seekers

· 流动性提供者（Liquidity Providers）

· 预测市场者（Prediction Market Users）

policy-holder

As an insurance seeker, I want to buy a fixed term policy for the agreement I use to protect my capital in the agreement, so how do you do that?

When you visit App.coverProtocol.com, you'll see the following image:

需要进行投保的人只需要关注市场这个选项即可（ Marketplace ）。如果你想买一份 yearn 的保险，你可以在这个界面中选择 yearn.finance。

There are a few things to note here;

·  有效期：此保单有效期至 2021 年 2 月 28 日

·  保险用稳定币 DAI 支付（作为质押品）

作为一个投保人，你只需要索赔 代币 （CLAIM），因此我们可以忽略无索赔代币（NOCLAIM）, 稍后将详细介绍无索赔代币。

The claim token is currently trading at 0.19DAI, so each DAI you need will cost 0.19 for insurance. So if you want to buy 10, 000 USDcs on Yearn Finance, you will have to pay 1, 900 DAI(very expensive, I will explain later why the prices are different).

To BUY insurance, if you choose to BUY, the page will skip to Balancer:

If there is a claimable accident, you need to file a claim:

In the CLAIM Selection directory on the left side of the page, click + FILE CLAIM.

If the application is approved, you may exchange your claim token at the rate of 1 Dai per claim.

Liquidity provider

As a liquidity provider, I want to earn fees from the money I provide to support the agreement as far as I can bear the risk.

When you visit App.coverprotocol.com and enter Mint, select the protocol you want to send collateral, select the expiration date you want to use, and type in the amount of collateral you want to send.

In the following example, the expiration date is set on February 28, 2021, and the pledge amount is 10,000 DAI.

Next, approve and proceed with the casting.

A familiar page (mentioned above) will appear on the next screen:

This will show you how many claims you have and how many noclaims you have. Let's take a quick look at the value mechanisms of the two tokens:

·   如发生意外，索赔代币价值 1DAI；

·   如果到期没有发生事故，没有索赔代币价值 1DAI；

·   在事件发生或到期前，索赔代币和无索赔代币不可同时赎回。

As a liquidity provider, you have the following options:

As a liquidity provider, I believe that this agreement will not have any claimable events:

So keep your no claim token until it's due, sell your claim token to Balancer pool to make a profit.

As a liquidity provider, I believe this agreement will have a claimable event:

So keep your claim scrip until an accident happens, then sell your non-claim scrip to Balancer pool to make a profit.

As a liquidity provider, I only want to earn fees from policyholders:

Put your claim scrip and DAI in Balancer Pool to provide liquidity, and you will be able to earn a transaction fee every time the policyholder buys a claim scrip.

As a liquidity provider, I simply want to earn fees from policyholders and users of forecastingmarkets:

Put your put your claim scrip +DAI and no claim scrip +DAI in Balancer pool to provide liquidity, then you will be able to earn trading/speculation/insurance premiums.

Forecast market users

As a user of the prediction market, I hope to make profits through the perceived risk of a given agreement. In the final analysis, the fundamental problem of the Cover agreement is whether an accident will occur before the insurance expiration date of Agreement X.

That's the perceived risk. Let's look at a few use cases:

As a forecaster market user, I believe that this agreement will have a claimable event (i.e., will occur before expiration) :

Buy the claim token in Balancer Pool and keep it until the agreement crashes.

As a forecasted market user, I believe that this agreement will have no claimable events:

Buy non-claim scrip in Balancer Pool and keep it until the agreement insurance expires. Both products have expiration dates, but users can also adjust for risk. Maybe something dangerous will happen next month, so the risk is small now, but the risk will escalate in the future, so you can buy the claim token now and sell it when the demand increases.

These are based on a perceived risk to the underlying protocol.

conclusion

I haven't discussed (or I don't want to discuss) Shield Mining in this article. Currently, liquidity providers receive excessive rewards when providing liquidity to the claim and non-claim pools, and a large part of the rewards they receive are achieved through the issuance of COVER.

The problem with this is that miners are buying claim and non-claim tokens to protect their mines, so the cost of tokens should be priced very high relative to their actual perceived market value.

As long as mining is kept alive, the market cannot provide a reasonable proportion or figure. And as the user experience is revamped with help from Yearn, that will become even easier.

There are three improvements I am looking forward to:

1. Perpetual insurance;

2. Use insurance first and pay later;

3. Agnostic collateral;

I believe the above three are important enough to be explained in this article, and I will update more later.

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