- What happens if UST goes to zero?
- if UST goes to zero, we have covered around $22m. Assuming everyone claims, and there are no exclusions obviously (Some have already sold their UST which may invalidate the cover). Our latest estimate puts this lower total around $15m after speaking to some policy holders. Our TVL is around 50m and with over 2m in revenues, plus reserve capital. So, there is sufficient funds, even at $0 for UST. However, if the de-peg does hold for the 10 days, we would estimate it to be somewhere in the 0.6-0.8 range. So, let us say max 40% of the above figure… $6m.
- What will the trigger event be for UST De-Peg?
The triggering event is the TWAP 10-day average dropping below 0.88.
- How will people know if TWAP is below 0.88?
InsurAce will make the breakdown via our announcement channel, however, our data will be collected from Coingecko. You can look at this data yourself from a 10-day average from the Close Price of UST.
- How is the TWAP calculated?
Take the daily close price for now, we are working on a more accurate daily average price than the close price right now. if it is close to 0.88 then we will develop a new more accurate model.
In the event of a pay-out on claims we will release an average price calculated much more accurately from the 10-day data.
- How to go about proof of ownership of wallets?
Prove ownership of wallet with micro-transactions (just a micro transfer using the affected wallet address will suffice)
- Do I need to hold UST in any of my wallet? or in exchange? or it does not matter?
It does not matter. InsurAce.io UST De-Peg Cover shall pay a claim if: The insured is holding UST or any representation of UST supplied directly as liquidity in the wallet or in accounts with any custodians (e.g. centralized exchange, asset management providers, etc.) at the time of purchase of the Cover.
Your UST could be on any chain, in any form. For example aUST.
It can also be staked into various protocols and CEX
- If I hold UST and then I sell UST and buy again (still during cover period), am I still covered?
If you sell all (UST amount drop below 1), the cover will be terminated. (e.g. if you had 100 UST and sell 50 UST, the other 50 UST will still be covered).
The amount of UST bought after 10 day before de-peg trigger time will not be covered.
- If I buy back UST before De-peg event, would it be covered?
See answer in Qn7 above.
- I have UST peg insurance with you and given recent events I have to file a claim. Could you provide me with a sample proof of loss which is accepted?
Need to wait for the 10 days average depeg to hold, for more details, please read our Twitter thread where we talk about the UST De-peg event: https://twitter.com/InsurAce_io/status/1523808073307287552?s=20&t=WaNE7TN90S4vED0q85hqHQ
Information on how to claim will be provided if the De-Peg is triggered.
- How will UST be sent in the event of a claim payout?
We will make further announcement on this when the event is triggered.
- If we get to 0 in the next 24/48h, we should be under 88 cents in the TWAP way quicker than 10 days, right?
Yes, it will hit the TWAP trigger sooner if the UST goes very low for a while.
- It isn’t 10 days, it’s just the 10 days TWAP right? I mean that it could be below 0.88 before the 10 days.
Yes, exactly. If it drops very low and holds that for a day, it would take the last 10 days average down significantly.
- As a rough guide, let’s say the actual claim comes to $6m. So, all stakers will take a haircut of 6/50 or 12%?
Yes, there will be some premium pool used first and some capital reserves, but yes, otherwise staked funds will be used.
- Would I be covered if I purchased insurance before or after actually having the UST in their wallet, as long as all of that took place BEFORE the depeg and they had active cover and the UST in their wallet at the time of depeg?
You had to have UST in your wallet before Cover was purchased.
- I’ve my UST locked up for staking on other protocols/CEX. What can I do now?
Locked funds like this will have a special section in our claim guide which we are currently working on it.
- I’ve UST on various platforms, do I need to transfer to a single wallet to make things easier?
We advise any holders of UST on #Terra to bridge their UST to the EVM wallet they used to purchase their cover. For people who have UST on a CEX, you can send it to EVM wallet, but we will still have to check the transaction history on your trading account as part of the review process. So keep that in mind when submitting claims to make it as easy for us as possible. We don’t want to delay payouts because someone won’t share their transaction history with UST on CEX. If you can’t, just wait for announcement and guide.
- The requirements are rather unclear and seem to be suggesting that policy holders shouldn’t engage in loss mitigation. I’m trying to get a straight answer both on the facts and the rationale for the design.
The De-peg policies are designed to cover the loss in value of stable coins generally before any of these happens. It makes sense that you are compensated based on your actual loss in depeg value. Imagine if everyone is not only compensated but also is able to sell their stable coins. It is almost impossible to manage the actual payout and it is also unstainable to our users as well as the business model.
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Case study questions
UST De-Peg case questions:
1) Regarding UST de peg insurance, that I bought 1 month ago and its valid till end of july.. after a while I started lp’ing Ust on curve via beefy and after that I bought additional insurance for smart contract volume. for curve and beefy but it was for 3 weeks only and it’s ending soon – around 10 days. I am wondering if I need to extend beefy and curve insurance to be protected from UST de peg?
– No, the two covers are separate. The De-Peg insurance will be valid until end of July as you stated above.
2) I have some $ in aperture finance, it basically works in symbiosis with anchor, so I assume it is covered?
– If you have the UST in these protocols, and have cover purchased… then yes, it is covered no matter where you hold it or stake it.
3) Was thinking the same about being able to claim earlier if you see the writing is on the wall (which it seems to be). I’d gladly claim at this point, I have $100k covered – at 80c / UST the current loss is around $20k rn, but better for you guys than fronting the whole $100k.
Also, can you advise on where we can track the 10-day TWAP?
– This is why there’s a 10-day average. Our belief is that the peg will be regained.
If we believe this will change, maybe there will be offers. But it is unlikely.
At least you have peace of mind, knowing that the funds are safe either way.
There are some ways to extract the data, and we will bring out some more info on this and updates on average price. But you can always check the daily open price on Coin gecko and work out an average price over the 10 days. This gives a rough idea.
(See image below)
4) If we have insurance for anchor & ust depeg.. if we sold UST now for say 0.80 – would we be entitled to claim the loss?
– No. Selling the UST invalidates the claim. You would have to hold it and swap that amount with us once the de-peg is triggered.
5) How much capital you guys have and how many UST you have to cover if it goes to 0?
– if UST goes to zero, we are covered around $15m. Assuming everyone claims, and there are no exclusions obviously. (Some have already sold their UST which may invalidate the cover) Our TVL is around 50m and with over 2m in revenues, plus reserve capital. So, there is sufficient funds, even at zero.
6) Let’s say that I have depeg cover for 100K UST and I have 100K UST provided in anchor and I decide to sell 60K UST during the depeg (for trading). if I buy the 60K back later, will I be able to claim for 100K assuming that the average peg is less than 0.88 after 10 days since the depeg happened?
– No, you are required to hold $100k throughout. The intent behind our wording has always been for holders of UST, aUST, etc. to be doing exactly that – hodling and not arbitraging throughout. Will concede that the wording of the cover policy might not be entirely clear on this, and we’ll take this into account for future feedback. Insurance is meant to cover your losses sustained during the de-pegging period. Regardless of eligibility, if you have not sustained any losses due to your trading in and out, then there’s potentially nothing to claim. So be prepared to provide and show Proof of Loss if this moves forward.
7) I’ve got UST deposited in the Abracadabra degenbox and have borrowed a enough against it that my liquidation price would be $0.27 (seemed like a safe level 48 hours ago!). I have the bundled cover of MIM/UST/SPELL. Will this cover my losses if I get liquidated or do I need to find some way to exit the position before UST crashes that low?
– If the funds are liquidated in this example, then the policy will not cover as the UST is no longer held by the wallet.
8) My existing coverage is due to expire on May 14th. If the 10-day average doesn’t drop far enough before then, am I just screwed? Any chance of renewing the coverage or anything?
– This is a really tough one. The 10-day average may be hit before then. But if not, then the cover won’t be valid. Let’s see how it goes, keep updated. We can’t renew coverage right now. Since the market has dropped, it’s dropped our TVL and reduced capacity. So, there’s not much capacity available across our platform, especially on these products.
9) I agree it’s a bit confusing. So let’s say in January 2022, someone pays for cover but they don’t (yet) have any UST yet. In February they sell some Luna for UST, and hold it, and in May – the depeg happens and they try to claim after 10 days at say 0.80. Are they covered?
- – No, they need to have UST before purchasing the cover.
10) You can see here that ust depeg is 12m but there are other ones that cover ust like anc + mir + ust de-peg, listed as 1.9m in coverage, etc if you add those all up it is about 22m (or slightly higher). Let me know if I’m doing the calcs wrong but according to the dashboard i see 22m of outstanding ust depeg exposure.
– Your calculations are correct. Those are the cover totals. But having spoken to a few larger policy holders we know that the real total is less. For example, one large cover holder we know had at least $2m in cover, but had previously sold their UST. So, we’re excluding these cases from our estimated total. Also, there are other instances that will not get paid out like others selling or arbing this situation. Finally there are some who are in long stakes who we may have to pay out over time. We estimate the total to be closer to $15m.
11) If the average is 0.6 after 10 days – can we then send our UST to you and how much USDC will you send back? EG. if we were insured for 50K USDC – and we sent 50K UST to you @ 0.6.
– Send us 50k UST then we will send back 50k USD worth of tokens to you.
12) By sufficient capital, you mean people who staked in underwriting will lose their entire stake? How much in % are we expected to lose for people who staked in the bsc underwriting pool?
- Our TVL is 50m, while based on our data page, it is estimated that the max payout on UST is 13m. In scenarios where there’s an insurance claim and payout, we’ll use the premium pool as the 1st tranche for payout, If the funds in that pool are not sufficient, we’ll need to use the capital in the underwriting mining pools as the 2nd tranche. And each pool is taken equally.
13) I only have the De-Peg Protection for UST and not the Anchor Smart Contract, I am still covered for De-Peg while holding aUST, right?
– Yes, you will still be covered.
- I have two policies. One is ANC + UST and the other is just UST. Total cover amount is more than enough to cover what I have in UST in my wallet. All good right?
– Yes they can be claimed separately. Let’s say you have 1000UST for example – One policy covering $600 UST DePeg and the other covering $400 smart contract & depeg cover. So yes you’d be able to claim up to the $1000.
15) If we have mirror shorts and things like that, that means we can buy assets with ust to close the shorts and get the collateral back?
– If you have mirror assets, you can trade out to other options other than UST so you don’t need to incur any de-peg losses if you don’t want to.
Additional info:
- Withdrawals are temporarily suspended when there are active claims going on
- Kindly note that the final claim plan is still under discussion at the moment. Please stay tuned for our official announcements where a detailed claim plan will be proposed in due course.
