Insure liquidity providers

How about taking some PNG from the treasury and use it to provide insurance to liquidity miners against hacks. I feel it would be give users comfort and more likely to incentivize larger holders to provide more liquidity.


Good idea, are there any insurance carriers that does this today ?

I have not done extensive research but there are some defi platforms that offer an optional insurance policy against bugs in smart contracts that result in loss of funds. It seems to be an emerging space and can be quite expensive. Hoping someone in the community may have more info.

I think this is great suggestion and fully support it.

Insurance from recognised insurers could be hard to find at a sensible price but not impossible. I believe most of the big exchanges have errors and omissions + cyber insurance in place to cover most major events.

We would have a significant deductible in a lot of cases to keep premiums low but the good news is that the treasury fund could easily self-insure the deductible.

If we are going to look at insurance, it will help our case if we have independent audits and other collateral to submit to the insurers to help them assess the risks.

Before we get to the type and cost of insurance, we still need to solve a preliminary question: who is being insured? That’s not a minor question. This platform has no legal entity or owner. Also, who has legal authority to sign the insurance contracts?

The other option is to fully self-insure. That would mean allocating a significant portion of the treasury fund (say $50m) into trust, released on the triggering of certain events.

Most insurers would expect that there is some form of risk allocation established between users and the platform. I’ve already raised a separate proposal to draft these terms so that there are clear limits and exclusions of liability. These should be introduced whether we seek external insurers or self-insure.

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very good idea… However this proposal should be especially for the png pools… this way price stability will be better. Small portfolios can be protected better against some whales using stable coins and dumping png rewards forcing png price going down