Hello LIDO Community,
Following our recent engagement and after taking into account the constructive feedback, we have fine-tuned our insurance offering. We aim to strike a harmonious balance that both represents the best interests of LIDO and resonates with our core principles at Chainproof.
The primary concern we gleaned from our discussions was the need for a structure that genuinely captures the risk-reward dynamics pertinent to LIDO. With this in mind, we revisited our strategy and crafted an updated offer tailored to LIDO’s unique requirements.
Our renewed offer
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Our renewed proposal recommends an insurance coverage sum of 2.8m USD (approx. 1550 ETH) which covers the most likely scenario 1 mentioned in the excellent post by Mol_Eliza.
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To render the insurance premium more economical, the revised offer incorporates a 10% Deductible. This implies that the initial 280k USD (approx. 155 ETH) of any potential losses would be borne by the pool.
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The insurance premium for this policy would be 100k USD (approx. 55 ETH) regardless of the number of active validators. Also, the premium may be reduced on a proportional basis with respect to the sum insured, but it may not be increased.
Given the cost-benefit analysis presented previously, we believe this to be the most cost-effective option that the DAO can opt for, and covers the majority of risks that the DAO aims to cover. We believe that any additional coverage would be extraneous and have diminishing returns.
We also want to offer more transparency regarding important aspects related to this offer:
1. Ease of Use
At Chainproof, we understand that the rapidly evolving world of web3 requires streamlined processes. This is why we’ve simplified our insurance acquisition process for the Lido DAO.
Insurance Document: We provide insurance as a straightforward legal contract signed between Chainproof and the ultimate beneficiary (the DAO, or its representative(s)).
Signature Process: Onboarding is as effortless as signing a document using DocuSign. A sign-off by a KYC-verified representative of the Lido DAO, and you’re set.
2. Claims Assessment
We respect the governance structures of DAOs and offer a claims assessment process that’s both fair and transparent.
Assessment Period: Our claims assessment period aligns with industry standards (5-7 days). This ensures a thorough investigation and fair outcomes as the post-mortem report put together by experts at Quantstamp will be shared with the insured and publicly.
Dispute Resolution: Should the Lido DAO ever disagree with our assessment, legal recourse is available. We uphold the DAO’s right to legal action if needed.
3. Claims Payout
Quick response during challenging times is our assurance.
No Cooldown: We commit to no Cooldown period. If a claim is approved, the transfer begins immediately.
Direct Transfer: Payouts will be made directly in USDC to the wallet specified by Lido DAO in the policy document.
4. Trusted Partnership
Our reputation is built on the trust of our partners:
Regulated Entity: Chainproof is a regulated insurance entity, ensuring an additional layer of trust.
Strong Partnerships: Our associations with Sompo and reinsurance provided by Munich Re stand testimony to our commitment. We have marquee customers such as Kiln, who are a Lido node operator, as well as Luganodes who are a top 15 global validator.
Previous Collaborations: Our parent company, Quantstamp, was an early validator of Lido’s robustness in 2020. See the audit here.
Incident response capabilities: As we develop an intimate knowledge of the underlying protocols such as Obol and SSV, we are happy to extend incident response assistance in the event of a slashing incident. Chainproof will be able to go above and beyond the role of an insurer and help with fixing underlying technical issues to prevent the risk of future incidents.
5. Coverage Details
Just like Nexus, our policy covers the direct loss of ETH to slashing (i.e. 1 ETH, or greater if correlated), and the penalties that are directly associated with the slashing event. It does not cover penalties that are unrelated to slashing, and it does not cover loss of rewards.
Thank you for your continued trust and collaboration.