Insurance

Underwriter vaults are capital pools created by users who want to earn premiums by providing insurance coverage. Vault creators deposit MySo tokens as capital, set their own pricing parameters (base rate, utilization multiplier), and define exposure limits. When users buy insurance, premiums flow into the vault, and the vault reserves capital to cover potential payouts. Vault owners can withdraw unreserved capital at any time.

Premiums are dynamically calculated based on vault utilization. The formula uses a base rate per day plus a utilization multiplier that increases as more capital becomes reserved. Higher utilization means higher premiums, creating market-driven pricing. Premiums are calculated as: (covered_amount × coverage_bps × total_rate_bps_per_day × duration_ms) / (BPS_DENOM² × DAY_MS).

Dynamic coverage means your insurance payout adjusts if you reduce your SPoT position after buying insurance. If you buy insurance for 100 MySo but later reduce your position to 50 MySo, your payout will be based on the 50 MySo position, not the original 100 MySo. This prevents exploitation where users buy insurance, then exit their bet, ensuring fair risk management.

The insurance protocol's flexible architecture opens possibilities across multiple industries. Beyond SPoT markets, it could protect prediction market positions, DeFi yield strategies, NFT collections, creator revenue streams, and even real-world event outcomes. The dynamic pricing and vault system enables everything from micro-insurance for small bets to institutional coverage for large positions. As decentralized markets grow, insurance becomes essential infrastructure for risk management across gaming, finance, content creation, and beyond.

The insurance protocol is designed for seamless integration. You can build entirely new platforms on top of it, or integrate it into existing SPoT markets, prediction platforms, DeFi protocols, and social networks. The protocol operates as composable infrastructure—any system that needs risk coverage can connect to underwriter vaults and offer insurance to users. Whether you're building a new prediction market or adding insurance features to an existing platform, the protocol provides the underlying mechanics without requiring you to rebuild everything from scratch.

The insurance protocol scales from micro-transactions to institutional volumes. Individual users can insure small SPoT positions with minimal capital requirements, while underwriter vaults can pool millions in capital to serve large institutions. The exposure limit system allows vaults to set their own risk parameters, enabling specialized vaults for different market segments. Whether you're protecting a 10 MySo bet or a 10 million MySo position, the same protocol infrastructure handles both. This flexibility enables everything from personal risk management tools to enterprise-grade insurance platforms built on the same foundation.

When you buy insurance, the vault reserves capital equal to: covered_amount × coverage_bps / 10,000. For example, if you buy 100 MySo of coverage at 50% (5000 bps), the vault reserves 50 MySo. This reserved capital cannot be withdrawn by the vault owner until the policy expires, is cancelled, or a claim is paid. Only unreserved capital can be withdrawn.

Yes, administrators can pause the insurance protocol for emergency situations or protocol upgrades. When paused, new insurance policies cannot be purchased, capital cannot be deposited or withdrawn from vaults, and policies cannot be cancelled or claimed. Existing active policies remain valid and will continue until expiry or resolution.

The insurance protocol enables a wide range of platforms and applications. Build prediction market insurance marketplaces, DeFi risk management dashboards, creator economy protection tools, NFT collection insurance platforms, or social betting insurance apps. The composable nature means developers can create specialized interfaces—from simple insurance purchase UIs to complex portfolio management systems that aggregate coverage across multiple markets. The protocol handles the core mechanics, allowing builders to focus on user experience, industry-specific features, and innovative use cases we haven't even imagined yet.

Policy duration is measured in milliseconds and must be between 1ms and the configured max_duration_ms (default: 30 days). You choose the duration when purchasing insurance. Longer durations typically mean higher total premiums due to the time-based premium calculation. Policies automatically expire at the expiry_time_ms timestamp.