Idle

Summary

In order to provide users a viable insurance option (and eventually launch an insured strategy), the cost of insurance needs to be lowered to an economical level.

On Nexus Mutual, Shield Mining (first introduced in this post) is an incentivized way to get NXM holders to stake behind your protocol, lowering the cost of insurance. In coordination with the Nexus Mutual team and Idle Leagues, we are proposing 2 simultaneous shield mining campaigns – one for idleUSDC, one for idleDAI – each for $50k USD.

The total cost would be $100k USD, funded in $IDLE by the Ecosystem Fund.

Forum Discussion link

Details

The current cost of insurance for Idle on Nexus Mutual, the largest protocol insurance provider, is over 40%, and needs to be lowered to the low single digits to make financial sense for users to purchase it (and an Idle insured strategy to be built).

Nexus recently launched a new product, Yield Token Cover, that acts as a put-option for yield-bearing tokens. At any time under the insurance period, for any reason, a user can execute the option, selling their token for 90 cents on the dollar (e.g. $100 in idleUSDC could be sold for 90 USDC if the option was executed). This is a great fit for our two highest TVL tokens, best-yield IdleUSDC and IdleDAI, as it protects against risk across all protocols the assets interacts with in the rebalancing process, not just Idle’s smart contracts.

To give the community the opportunity to buy this new product in a cost-effective manner, we must get NXM holders to stake behind the contract. Shield Mining has historically achieved this, with every campaign lowering the insurance premium to the minimum 2.6% and increasing cover capacity significantly – details can be seen in Hugh’s post here.

The Leagues believe $50k campaigns on each asset should lower the cost to 2.6% and provide sufficient cover for the current demand.

Among passing of the temperature check, details on the duration of the program and amount of IDLE per NXM staked will be discussed with the Nexus team in order to maximize cover capacity, and be included in an IIP for the community to finalize.

Any unused cover capacity can eventually be bought by an insured strategy (a vault that accepts USDC and DAI, deposits them to the best yield strategy, and uses a portion of the yield to automatically purchase cover in the correct amounts for the assets in the pool) when it gains sufficient TVL.

Further benefits of shield mining over other methods of lowering insurance costs were also discussed in this post.

Voting Options

Please cast your vote to indicate if you are for or against the proposed shield mining campaign:

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2.   AGAINST