Comprehensive List of All Users

I’ve been thinking on the tokenomics and, in particular, the excellent work done by this community in the 4 part series, and while it all seems great, I cannot shake we need to take a step back (or at least I do) and go through a more base level exercise to better understand and map out the tokenomics design back to these users.

I don’t want to get caught up in ‘long-term’ vs ‘short-term’ holders, but more broadly I’d like us to define (a) who are the users of unslashed.finance and then work towards (b) what is their incentives to use/be-a-part-of (or not be a part of) USF.

Here are the ones I see

A. Cover Buyers.
These are the primary users, right? People or projects who need/want insurance. They literally buy policies and the system does not exist with out them. (At this point, they could care less about $USF)

B. Capital Providers.
These are users who provide capital that funds cover. They are equally critical to the app. Because of the current USF incentives, they do care (currently) about $USF, but they are also dumping it so they don’t actually ‘care’ about it and they probably don’t have to. Is it possible the system rewards could be enough? We don’t have to answer this today.

C. Liquidity Providers
These are only necessary for a secondary USF market. If there was no token, we would not need this group, but since there is, we do, at least, if we want to have liquidity (which we should). They may or may not care about $USF, but currently, without incentivizing it, there is no real reason to LP (?). I do not know this to be true.

D. USF Holders
These are (probably) traders. For now, it’s also voting rights in scattershot.

E. sUSF Holders / Stakers
While not built out today, this is (more of less?) the DAO. You more or may not have sUSF (or uUSF) to have voting rights (?), but the point is, they are USF holders who have gone an extra step to “lock” their USF into the system to be involved with it, to vote, and possibly have other benefits.

F. The Treasury
While not an actual user, value does accrue here so I think it’s important we consider it as a user of the system. It is a place where assets will live.

G. The Dev Team
While probably USF users, without them, we have nothing. Perhaps their payroll from raised funds is enough incentive for them, but they are obviously important to the project.

Any others?

Once we have this list, I’d like to see us think through how any tokenomics incentives or punishes behavior for each user of the system.

Ultimately, I think (and again, I may be wrong) we would like for all users to care about USF in some form or fashion. Mapping this out will help us (or at least me!) understand the design we are going for.

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I think you covered all of the players and I also agree with counting the ‘F. The Treasury’ as a player itself.

I think the #1 Priority should be fairly compensating B. Capital Providers. Attracting them will allow Unslashed to give the proper Cover. Obviously it will have to be a virtuous feedback loop between B and A, having Capital to Cover, get new A. Cover Buyers → the premium from Cover Buyers increases the returns on capital → favorable returns can attract new Capital Providers.

This should be priority. as long as Unslashed can grow volume, then even a small % of the revenue will be enough to grow The Treasury and do things like USF market buy backs that can then be distributed to USF Stakers.

I do believe we need to continue to provide some incentive to C. Liquidity Providers on Uniswap. I think the threat of Impermanent Loss/locked up capital opportunity cost/other types of yield farming activities would sway away most LP’s if we don’t continue to provide sufficient Incentives.

When it comes to Capital Providers and Liquidity Providers we should focus on long term encouragement incentives, not penalizing short term incentives. If there is too much short term activity then stretch out the time reward time period/ have rewards vested over a longer time period/ reward those who stay for longer periods of time.

G. The Dev Team, regarding the Devs, I have no knowledge so I do not know. I only vaguely believe that part of protocol revenues should be devoted to Dev Team to reward them for their hard work/successful product.

Short Term Priorities: #1 Reward Capital Providers + Attract Cover Buyers in a positive
feedback loop.
#2 Successfully executing priority #1 will generate enough revenues that even
small %'s of it will be able to grow Treasury, reward sUSF holders,
and compensate Dev Team.

Later/Longer Term Priorities: #3 I think most Assets need to be invested in low risk, small portion in
higher risk.
#4 Strategy for insuring high risk policies → Reinsurance. These
quotes are literally copy-pasted from part of ‘Investopedia: Main Business Model for Insurance
Companies’.

" Reinsurance is insurance that insurance companies buy to protect themselves from excessive losses due to high exposure. Reinsurance is an integral component of insurance companies’ efforts to keep themselves solvent and to avoid default due to payouts, and regulators mandate it for companies of a certain size and type."

“Regulators mandate that an insurance company must only issue a policy with a cap of 10% of its value unless it is reinsured. Thus, reinsurance allows insurance companies to be more aggressive in winning market share, as they can transfer risks. Additionally, reinsurance smooths out the natural fluctuations of insurance companies, which can see significant deviations in profits and losses.”

" For many insurance companies, it is like arbitrage. They charge a higher rate for insurance to individual consumers, and then they get cheaper rates reinsuring these policies on a bulk scale."

That 3rd quote ^^^! That is the model for us to find our niche.

Reinsurance/Higher Risk coverage should not be Short Term Priority though. This should just be marked down to discuss down the road.

All hard numbers/math will have to be done by Dev Team I think. And finally, I apologize to your eyes for my poor formatting.

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