The Idle Finance community has previously expressed a desire to get cover for their investments.
Armor enables protocol-level coverage for Idle Finance underwritten by Nexus Mutual. This coverage protects Idle Finance assets against smart contract risks. From 26 April 2021 this cover will extend to the full spectrum of protection against oracle attacks, severe economic attacks, and governance attacks.
Currently the yearly premium is about 40%, which isn’t attractive, however, this cover premium can be brought down by staking on the Nexus Mutual Idle Finance contract. With a sufficient amount staked - 50,000 NXM or more - it will lower to the minimum 2.6% annual premium.
Armor is the largest staker in Nexus. As Idle Finance is part of the Armor Big Bounty Alliance, Armor can shift part of its stake to the Idle Finance contract and lower the premium on armor.fi
In order to do so, Idle Finance may choose to buy a minimum of $2.5m in cover, with up to $5m / $10m being available for the community as that would cover most cases before active exploits are plugged following automated alerts.
The minimum costs for this would start around $65,000 DAI per year for $2.5m DAI coverage, when Armor stakes 50k NXM or more.
Idle Finance can purchase this cover to protect users at a protocol level. This way, the users don’t have to cover their own positions; instead any trader and staker will have their positions covered up to the covered amount.
In addition to cover, Idle Finance will be eligible to receive a grant equalling the USD value of the coverage secured in the first cover purchase.
Idle Finance could stake the grant tokens into the Balancer 98:2 pool for ARMOR rewards. Soon, it will also be possible to stake into Bancor single-sided pools or a vARMOR vault for rewards. Following Armor’s Cream listing (coming up shortly), Idle Finance may collateralize the tokens to earn lending fees and enable borrowing too.
Thoughts and feedback are welcome!