DefiDollar $DUSD coverage now live on Cover Protocol

We constantly strive to make DefiDollar (DUSD) more secure for our community. Adding coverage for DefiDollar on Cover protocol is another step to put together a wholistic risk management strategy for the DefiDollar users.
This comes shortly after we introduced a bug bounty program last week with upto $30000 in rewards.

Being listed on Cover enables interested users to be able to buy security cover for any loss that might happen due to vulnerabilities or bugs in the DefiDollar smart contracts. The scope also includes any flash loan attacks made on the protocol leading to loss of funds.

Shield Mining:
In order to ensure that the coverage pools are bootstrapped the DefiDollar team has allocated 15,000 DFD per week as rewards for the Cover shield mining program. These rewards will be distributed starting now till the expiration (31 March 2021) to coverage providers and are meant to encourage users to provide coverage for DUSD, enabling coverage seekers to buy coverage with minimal slippage.

Understanding Cover for DUSD

Head to the Cover Marketplace and navigate to the DefiDollar card.

DefiDollar Dashboard on Cover

Please observe the following:

• There are two tokens (listed under direction): CLAIM & NOCLAIM
• The coverage is paid out in yDAI and the expiration date of the initial cover is till 31 March 2021

CLAIM & NOCLAIM work in the following manner:

• CLAIM tokens will be worth 1 yDAI if case of an incident
• NOCLAIM tokens will be worth 1 yDAI in case the expiry date is reached without an incident
• CLAIM+NOCLAIM can be redeemed together for 1yDAI before any reported incident or expiry of the contract

Important note: Holding CLAIM tokens will protect you for the duration of the cover period against any incidents occurring due to the smart contracts being compromised due to vulnerabilities or bugs in the code.

CLAIM :

Coverage seekers hold only CLAIM tokens. The goal is to cover the exposure to DefiDollar. CLAIM token for DefiDollar is currently trading at 0.016 DAI, that means every 1 DAI of cover costs $0.016. Therefore in case you wish to avail cover for 1,000 DSUD it will cost you 16 DAI.

How to buy

Click on Buy — on the row in which Direction is listed as ‘CLAIM’

To purchase cover for DefiDollar, click the “Buy” button to buyCLAIM tokens in the Cover Marketplace . This opens a Balancer Exchange window where you can get CLAIM tokens. Please note that the CLAIM coverage token is specific to DefiDollar and the expiry time that you opt for, which in this case isCOVER_DEFIDOLLAR_2021_03_31_yDAI_0_CLAIM

Benefits of holding CLAIM

• Be protected against losses due to smart contract bugs, vulnerabilities in DefiDollar
• Earn liquidity provider fee by providing liquidity for CLAIM tokens

Risks

• Lose the paid premium when there is no claim. Remember, that means funds are safe in the protected project

File for Claim:

In case of a security event that results in the loss of funds, the ones holding Cover will need to file a claim specific to DefiDollar. When the claim is approved, once can redeem the CLAIM tokens for 1 yDAI each. Incidents reported within 3 days of an event are eligible for the claims to be valid.

NOCLAIM :

Coverage providers hold and provide liquidity for only NOCLAIM tokens.
If you are confident in the security of the project you can bet on the same by holding NOCLAIM tokens and earning yield.

How to Mint

Select DefiDollar under the Protocol Drop down

Liquidity providers can deposit yDAI to mint both CLAIMandNOCLAIM tokens from the Cover app.

If you hold DAI , you can deposit DAI on Yearn to get back yDAI. Using yDAI as a collateral allows for coverage providers to earn yield while providing collateral to the Cover protocol.

Enter the amount of yDAI and then click on Approve and then Mint. Visit the dashboard to check the CLAIM & NOCLAIMtoken balance.

Strategies that can be implemented:

• If you are confident in the DefiDollar and believe that there will not be any claimable incidents, sell your CLAIM tokens via the balancer pool for DAI while holding on to theNOCLAIM tokens
• If you believe that there will be claimable incidents int he DefiDollar protocol, sell your NOCLAIM tokens via the balancer pool for DAI while holding on to CLAIM tokens
• To earn fees from Coverage Seekers, become an LP and provide your CLAIM + DAI to the balancer pool. This enables you to earn trading fees on cover purchases every time someone buys CLAIM tokens.
• To earn fees from both Coverage Seekers and speculators become an LP by providing both your CLAIM + DAI and NOCLAIM + DAI to the balancer pool.
• Participate in shield mining by staking the above LP BPT’s on Cover Protocol

Risks

• Collateral is lost when there is a claim accepted against the protected protocol (in the event of user funds lost)

The partnership between DefiDollar and Cover provides DefiDollar users an avenue to manage risk efficiently. It empowers DUSD holders who are confident about protocol security by providing them opportunities to earn yield and shield mining rewards.

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