Policy Definition

How we formally define a policy

Introduction

When the user requests a policy, we run our decisioning and pricing services and propose a quote with clear and transparent commitments to the user. Once the user buys the policy, they accept the following terms.

Policy Terms

• LTV_PROTECT: We will always deposit collateral if this threshold is breached. This will typically be some percents under the lending protocol liquidation threshold.

• AMOUNT_PROMISED: The exact amount in stable that we will convert and deposit to protect the position if LTV_PROTECT is breached.

• NUM_DISBURSEMENTS: The number of time/parts that the AMOUNT_PROMISED will be divided into. For example, if it’s 3, we will disburse ⅓ of PROMISED_AMOUNT every time LTV_PROTECT is breached.

• OPEN_FEE: Percentage of amount promised.

• INTEREST_RATE: APY accrued every second.

• VARIATION: (more details here)

  • OCL: Over-collateralized loan, we will automatically foreclose if the position goes under the amount owed to us. (or at risk of lending protocol liquidation) - When choosing OCL an extra parameter CLOSE_TOLERANCE is also part of the policy to define “goes under”

  • EC: Extended Coverage: We only foreclose if the position is at risk of lending protocol liquidation; and accept letting our loan become under collateralized.

• AUTO-REPAY OPTION: Not part of the scope of V1, but could be part of V2. When the position allows repaying the loan and with coming back to a target LTV, we automatically repay ourselves.