As shared on Discord:
"Over the last month, we had many discussions here and on Telegram regarding the withdrawals and the use of the capital. So I would like to take a minute and summarise everything:
A) The ETH that is supplied to any Capital Bucket or Capital Pool is meant to be used for insurance. Until last month, some of it was not used and stayed as part of a buffer that allowed withdrawals to happen. We had regular deposits and withdrawals. With more policies sold and more withdrawals happening, the buffer ended up being consumed. The ETH that remained inside the spartan bucket was all used for insurance.
Being sold out is usually a good news but in this case, we started seeing a lot of frustration and some wanted immediate withdrawals.
B) What was my blindspot? When we announced the Private Launch, the maximum yields on ETH were 6-7% from Alpha Homora and we had a hypothesis that a 20% yield will always be more attractive and that was our target yield from USF rewards. Therefore the hypothesis was that we would always have some buffer, especially after we add asset management and increase the yield even more. I didn’t account for the possibility that 20% won’t be attractive anymore, this fast. It is on me and I take responsibility for it.
C) How we approach this situation from a pragmatic perspective:
1- First we started with the Asset Management side, given it was pretty advanced and already audited, we pushed it first.
2- Second we made changes to the pricing model in order to have a premium price that goes parabolic whenever the amount of buffer available for withdrawals becomes too low. This will apply for new policies, we can not change the old ones.
3- Third we moved back to focusing on the official launch
All of the above solutions are pretty advanced, audited and ready to be deployed (the Asset Management has already been deployed and we made some tests on mainnet already to make sure everything worked as expected)
The question that was raised over these last days is whether we should:
- Put everything on hold and wait for all the Capital to be available for withdrawal (a first tranche will be available by end of June if we put everything on hold and a second one will be available 7 months from now). We won’t list any new policies and not do anything to sell any additional insurance - the objective will be to purely wait the Capital to be available for withdrawal.
- We follow the plan stated above, move forward with the official launch, list more policies, sell more insurance, deploy more capital through asset management and have a higher yield to attract more deposits and have a buffer again.
Given that the official launch and the next steps would require the full support of the community, I would like to ask this question and submit it for a vote. We can not move with the official launch and at the same time have members of the community taking shots at the project. We would actually need everyone to help us spread the word and have as many insurance buyers as possible.
I would like to submit this for a governance vote."