Part of the conversation pointed out that users would be willing to use coverage/insurance products through Idle UI. We picked up these hints and worked on a coverage section for Idle dashboard that would allow users to buy coverage from multiple providers.
This tool can interact with any coverage protocols but, at the time of writing, only Cover Protocol would be available. Here’s a sneak pic of it:
Users can be Liquidity Providers, buy CLAIM tokens to cover their assets in Idle protocol, or buy NOCLAIM tokens (and get rewarded if no attack occurs on the protocol).
However, Cover’s pools for Idle’s smart contracts have very low liquidity (about 8k DAI). Such liquidity is not proportional to Idle’s TVL and purchasing coverage would be inconvenient due to the high premium.
We can have a couple of options here that we’d like to discuss with our community:
- Is there any interest from our Governance in providing an affordable coverage service? If so, liquidity providers should be incentivized through rewards. Some protocols are already rewarding Cover LPs (here). We should explore the effectiveness of such rewards on liquidity providing, as deposits vary from 100k DAI up to 10 million DAI (excluding BoringDAO, the average is 372k DAI). If we decide to take this path, a further cost-benefit analysis should be made.
- Are there other coverage protocols that can ensure affordable coverage without having to issue rewards? (e.g. that is running its own liquidity mining program)