Lido DAO

The proposal is to purchase that cover for 150000 stETH for 6 months by spending stETH from the insurance fund and topping up the rest by selling treasury’s LDO on the open market.

Unslashed Finance proposed a purchase of a slashing cover policy for Lido: https://research.lido.fi/t/buy-slashing-insurance-for-steth-on-unslashed-finance/288

The policy was designed specifically to cover slashing and offline penalties risks and the losses that might result from it. The policy focuses on a slashing rate of 5% that could happen over a period of 2 months starting from the moment the triggering event takes place.

The policy also covers offline penalties that amount to more than 1% of the staked ETH for a single validator or Node Operator and a 5% maximum limit.

The pricing for this cover will vary between 1% and 1.5% per year of the slashable amount and is justified by the history of Lido’s Node Operators who have been running validators over more than 20 PoS networks during the last 2 years.

Out of the more than 100 000 ETH being currently staked, 5 000 ETH would be slashable and the yearly cost would be 75 ETH maximum. Unslashed smart contracts being designed to work in cycles of 6 months, a deposit of around 37.5 ETH would allow to buy the cover and pay the insurance premium.

The non-consumed ETH at the end of the cycle will be automatically rolled over to provide insurance over the following cycle or could be withdrawn by the Lido DAO.

The Lido DAO will receive and hold Protection Tokens that will allow them to make a claim and get a reimbursement whenever a slashing event happens. The Lido DAO can stop the cover and get all non-used ETH back whenever they want, the premiums are being streamed in real-time and the model is a pay as you go model.

This policy will be subject to Cover Mining, which means the Cover bought by the Lido DAO will make them eligible to receive $USF tokens once these are released early march.

Policy document on IPFS, immutable: https://gateway.ipfs.io/ipfs/QmQtQyKgiKf2mqPDMhbLQJYLP8v7ZDmrdkSYGSyE9fnjZV