InsureDAO is now looking to get 2 delegate approvals for cycle #8, or any additional feedback for a further amendment if needed.
@OPUser, @SEED_LATAM_Joxes, @MinimalGravitas, @Gonna.eth, @ScaleWeb3,
@GFXlabs , @linda , @Bobbay_StableLab, @fig, @katie
Glad to see the value this project will bring. Support.
HI @rubiokishi , Thank you for the tag but unfortunately my support wont be considered as a valid delegate approval as i no longer hold 0.5% voting power but dont worry, others will help you.
Thank you for replying.
Let me know if you have any additional feedback on the proposal!
I am one of the Synthetix Ambassadors, and a member of the Defi Shadow Committee.
I am an Optimism delegate [Delegate Commitments - #65 by mastermojo ] with sufficient voting power, and I believe this proposal is ready to move to a vote.
Hi @SEED_LATAM_Joxes, @MinimalGravitas, @ScaleWeb3,
@GFXlabs , @linda , @Bobbay_StableLab, @fig, @katie, @jackanorak, @MoneyManDoug
This is not asking for endorsement, but we need one more approval.
Would you mind approving our proposal to be reviewed in week 2?
I am an Optimism delegate [Delegate Commitments - #18 by katie] with sufficient voting power and I believe this proposal is ready to move to a vote.
Thank you for this interesting proposal.
We believe different sorts of insurance are key drivers of liquidity as they enable the management of risks whether that is general price risk, smart contract risk or total value at risk.
We got a couple of questions:
The proposal
InsureDAO is not the first offering insurance on Optimism as Risk Harbor and Nexus Mutual also offer cover for Op projects. On other protocols, the stablecoin and leverage farming pools are most used as professionals lock-in returns. Insuredao offers support for more protocols on Optimism than any other but reached limits.
From what weāve seen, InsureDao is a microcap with rather small underwriting, small reserve pool and little liquidity for cover purchasers so far. With incentives, the underwriting could indeed significantly grow and help your protocol as well as the listed protocols 
The proposal looks reasonable in size and value-add. We mainly hope to get some insight to risk management to avoid surprises for insurance purchasers before incentivizing vault growth.
Thank you for your questions!
Following are the replies to your questions!
Growth
Why is it that you have much lower TVL & underwriting than other insurance providers incl. smallcaps such as Insurace?
We havenāt allowed users to provide liquidity as underwriters so far. We will open the underwriting function this week and start to incentivise underwriters in December.
The projects you support on Optimism have all reached their ceiling. Whatās holding you back from getting more organic liquidity/underwriting and consequently offering more insurance cover?
They havenāt yet reached ceilings, but little liquidity left for some covers such as for Lyra. Once we open the underwriting function, we will initiate a dynamic pricing model for premiums so that premiums for popular covers become higher which attracts users to provide more liquidity.
ReportingDAO
Who is part of the reporting committee?
Members are the followings:
More members can be elected or they can be excluded based on the governance voting by tokenholders.
De-peg insurance
Will automatic payouts be similar to Risk Harborās small vault on Optimism that underwrites a couple of different protocols and āpays out within 3 blocks if the SUSDC token does not redeem for enough of the underlying tokenā) or will it follow the claim process from your docs?
Depeg insurance pools only underwrite their own subject stablecoin so this part is different from Risk Harborās vault. Additionally, their cover amount will be hedged by the short position for their subject stablecoin, so underwriters wonāt lose their funds even if the payout event occurred. We believe this mechanism attracts more underwriting liquidity than any other depeg insurance on other insurance protocols.
But yes, the payout will be similar to the Risk Harbor model. Claims will be automatically valid when a subject stablecoin is depegged based on Chainlinkās Oracle, therefore, buyers donāt need to submit proof of loss for claims but only have to send the USDC for the cover amount and can claim the full amount regardless of their status.
The default ratio and the payout ratio are still under adjustment but will be more purchaser friendly on InsureDAO.
You can read more details in the tweet thread below.
Pricing, Calculations, Risk Framework, Risk Management? (maybe refer to the following points)
Once we open the underwriting function, we will initiate a dynamic premium pricing model which is based on demand and supply. Each starting price will be determined by the analysis of risks by the reporting committee.
Short-position for stablecoin comes at a continuous cost vs. potential payoff in the future
As for the de-peg insurance, the hedge cost for short-position is paid by cover purchasers, and purchasers donāt need to pay the additional cost. By using InsureDAO, users donāt need to deposit collateral to build a certain short position, therefore more capital efficient.
On the underwritersā side, their rewards are derived from the supply yield in the lending protocol used to short a subject stablecoin. As a result of the short position, underwriters will get leveraged returns, so they can earn more returns rather than simply lending their funds directly to the lending protocol.
Liquidity investment should generate yield but adds additional risk
Youāre right. So, with the reporting committee, we analyse risks and choose the protocols that got audited multiple times and even have their own security funds such as Aave at the moment.
Single & Index pools: Unslashed Financeās top pool (Spartan Bucket) got overused and they had to racalibrate and de-risk, for example by removing USDN peg policy
Firstly, Index pools are created only by the core team based on the risk analysis by the reporting committee, and only selected pools will be included in the index pools.
Moreover, as our insurance pool model is not the all-in-one pool and there will be 4 index pools which are segregated from each other, risks are diversified not only inside the index pool but across multiple index pools.
The reserve pool is rather smallā¦
We will incentivise users to provide liquidity to the reserve pool as well when we start the farming for underwriters. Moreover, the reserve pool will grow along with the insurance purchases since a portion of the premium will go and be locked to the pool. The leverage rate will also increase based on the amount of the reserve pool.
Claims
Insuredao had no claims yet, correct?
Correct.
InsureDAO is not the first offering insurance on Optimism as Risk Harbor and Nexus Mutual also offer cover for Op projects. On other protocols, the stablecoin and leverage farming pools are most used as professionals lock-in returns. Insuredao offers support for more protocols on Optimism than any other but reached limits.
InsureDAO is the first insurance protocol launched on InsureDAO. As Risk Harbor is deployed on Optimism recently, we are not the only insurance protocol but still provide cover for more protocols that are not covered by Risk Harbor.
Users can purchase covers for Op projects from Nexus Mutual as well, but the protocol is not on Optimism. We believe purchasing cover without switching chains brings a better experience to users on Optimism.
From what weāve seen, InsureDao is a microcap with rather small underwriting, small reserve pool and little liquidity for cover purchasers so far. With incentives, the underwriting could indeed significantly grow and help your protocol as well as the listed protocols
The proposal looks reasonable in size and value-add. We mainly hope to get some insight to risk management to avoid surprises for insurance purchasers before incentivizing vault growth.
Yes, with incentives, we would like to increase capacity and protect more funds in the Optimism ecosystem. Hope this reply answers your question.
Finally, thanks again for your time and questions!
Thank you for the replies.That clarifies most questions.
We believe it would be great for your users to see some risk framework like this or this in the future.
I agree with that.
We will work on the documentation about our risk framework!
Recommendation from DeFi committee C
Details
The proposal is well formulated, clear and descriptive. Also, the IsuranceDAO team answered all the questions in the forum and updated their proposal according to the comments received.
Value-Add
InsuranceDAO is the only native insurance protocol in Optimism offering insurance for more Op projects (18) than others. The proposal mainly plans to achieve more liquidity (-> underwriting) which would enable more cover purchases and more risk hedging.
Traction
Insuredao is a relatively new, small project compared to other players in the insurance area, such as Nexus Mutual and Insurace, with less than $1M in total coverage. Traction is small as they didnāt allow users to underwrite so far but limits per project are reached on Optimism & they are opening the underwriting function now. This grant could be catalytic and lead to a kickstart.
Amount
100K OP seems reasonable for the size of the project. Distribution is mainly focused on incentivizing liquidity and a small amount for integrations and token liquidity.
Co-incentives
Not officially confirmed but will try to match.
Alignment
InsuranceDAO has the highest number of hedges in the optimism chain. This could be interpreted as an indication that itās aligned with the network.
KPIs
$2M Liquidity
$1M Insurance Purchases
$45K Pool liquidity for Insure-WETH on Velodrome
Recommendation:- YES
Our past recommendation is available on committee recommendation thread
I will vote FOR this proposal, following committee recommendation. Happy to see the team adjust to feedback.
@rubiokishi can you provide a Telegram handle or other contact method so the Optimism team can get in touch about paying out this grant! Feel free to comment on this thread, DM, or email palash@optimism.io
