Start listing "Medium Risk" Policies in the Spartan Bucket

Context

The Unslashed policies listed thus far in the Spartan bucket are categorized as “low risk” and their yield reflects that. In the future, the plan is to have multiple buckets with differing risk profiles, but that may take some time. Up to this point, the Spartan bucket is only listing low risk policies.

Over the past couple weeks there have been a handful of community discussions that have made me think about the idea of how to provide some momentum in the shorter term while still keeping a path for the long term plan in place. One of these options would be to add the ability to list medium risk policies to the Spartan bucket until a specific medium risk bucket is launched.
Some rationale for this proposal:

  1. Importance of speed and market share. Currently, since we only have a low risk bucket, that is a barrier to finalizing some partnerships/policies that may fall under the medium risk category. Rather than waiting for the structure for the medium risk bucket to be completed, adding medium risk policies to the Spartan bucket will enable Unslashed to finalize the policies and announce additional partnerships.

  2. Additional Yield- Due to the risk/reward profile of the medium risk policies, but listing them in the Spartan bucket, we would see additional yield to capital suppliers.

  3. Business Development- By doing this, it may make other protocols more aware of the ability to be insured by Unslashed and also may make Unslashed more attractive to stakeholders looking for additional yield.

Medium Risk Policy Definition:
I know many people are curious about risk calculation and what determines low vs medium risk. For the purpose of the proposal, “medium risk” policies would be for protocols that are:

• Newer projects but have larger TVL and audited by companies with strong reputations
Or
• Projects that are established yet may have had old issues in the past (such as a hack or smart contract vulnerability) but since changed how they approach security (multiple audits, code review) after that and had 6+ months without any issues.

Proposal
I am proposing that we enable the ability to add medium risk policies to the Spartan bucket until a medium risk bucket is launched.

Per the discussion below:

  1. The team will define the initial minimum criteria for medium risk policies as we are in a Carte Blanche period.
  2. Following the Carte Blanche period, the DAO can vote to help evolve the criteria should this be needed.

This will provide the above benefits and while it introduced some additional risk to the bucket overall, capital suppliers will be rewarded for that risk with additional yield.

I would like to have discussion from the community and then put this to a vote on snapshot.

Opening a vote on Scattershot here: Scattershot (fork of Snapshot)

7 Likes

Love it. Would vote in favor.

1 Like

Great idea/proposal Easports, I think this is a good way to move forward in offering more insurance.

I think most in the capital bucket would be happy to take on a little higher risk for more return.

Would start off on the lower end of medium risk.

1 Like

I do not know of any downsides to this (except an increase in overall risk to the pool) so if there are any others you can think of, please list them in the main article.

In favor and would vote in the affirmative.

2 Likes

I like the idea but have a few questions:

  1. Any sample projects in mind?
  2. Are we going to define the minimum TVL requirements so that there is no room for doubt?
  3. Will each project have to be vetted or voted in, or are we going to have a well defined criteria and as long as that criteria is met they will be added automatically if a partnership is reached?
  4. Will projects that have been added be removed if the criteria no longer holds (e.g. minimum TVL is 500mill and project went from 1b TVL down to 400mill)
1 Like

Thanks Gon. Appreciate the thoughtful questions. Here are my thoughts-

  1. One sample I know has been asked about a few times is Harvest Finance. I was chatting with Marh a little and there are potentially others in the pipeline, but would defer on specifics.

  2. I feel like as we build out a medium risk bucket, this may evolve a little as it is likely a combination of factors such as TVL, audits, types of risk coverage, etc. In the short term, I was thinking we leave this up to the teams judgement in the Carte Blanche period we are in, but I think this is a great idea for the DAO to start coming up with definitions for minimum guardrails for protocols and the rick buckets that they fall in.

  3. Similarly to the above, while we remain in the Carte Blanche period of control for the team, I would advocate for their judgement to be used to add in automatically if coverage is sold/partnership is reached, but in the future, my understanding is that the DAO will need to vote in or define criteria for this. Maybe this could be part of a longer term plan related to number 2 above?

  4. I think this would be contingent on the terms of the contract with the policy. I can’t imagine we could rapidly remove them if the policy had different definition. I don’t mean to punt this, because I think these are good questions to think about, but I think it will need to be defined.

I guess overall, I think you bring up some good points and considerations that we as a DAO should discuss and outline a plan for, but given we are in a period where the team has full control and focused on launch, I see more benefits to move forward with this quickly while also appreciating it means some degree of uncertainty and trusting the Unslashed team in the near term.

Would also want @Marh to weigh in on this since part of my thought process was doing this to help expedite some benefits, but also recognizing in the shorter term, trusting the team on some of these judgement calls since we are likely still defining these details.

1 Like

Awesome!! Support!!!

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Thanks for answering, I appreciate it. With those clarifications I’m in favor of passing this vote.

To wrap up the thought process based on your answer maybe the proposal should reflect the following:

  1. The team will define the initial minimum criteria as we are in a Carte Blanche period.
  2. Following the Carte Blanche period, the DAO can vote to help evolve the criteria should this be needed.

Does this sound right?

Great job, as always, coming up with these proposals and bringing them up for discussion!

1 Like

yeah, agreed with your summary. I will add those points to the proposal. Thanks!

1 Like

I think it is great to add new policies so that the protocol can grow and get more momentum.
The only thing I would say though, as a capital supplier, is that it would be nice to have more visibility in terms of the risk level of the bucket.
Labeling protocols low, medium or high risk can be subjective. Something more useful some dashboard showing what my current exposure is to each of the protocols in the bucket, and how much of my eth is at risk if one or more of the protocols were hacked at a given time

3 Likes

I think the dashboard concept is a cool idea.

In general I think some of this is in the pipeline for the team to expose more info on risk calculation, but would love input from the team on this one.

100% support for the idea.

Doing so, maybe it could be a good idea to make it more obvious that supplying capital the user takes the risk to loose part or totality of that.
I know it seems obvious for an insurance protocol, but when reading the comments I guess it’s always good to be cristal clear about that, should the risk starting to be higer…

1 Like

I like this idea!
@EAsports, it may be worth feeding this back to @Marh for future development?

In favour of the idea, but need the parameters to be more specific and could not vote in favour of this as is. What would be considered a larger TVL project? Could you give examples? Also, would want the parameters for changes in security further defined.

1 Like

In fact, this is probably in the pipeline since one of the medium articles introduced the idea of customizing the risk of the spartan bucket.
For example, a user supplying capital to the spartan bucket could also buy cover against USDT losing its peg. With this strategy, you effectively remove your exposure to some of the policies you are not comfortable with. See the original article here: https://link.medium.com/QjI7kuniGfb

Here is the reply Marh had given on telegram at the time: “I think we are going to do it directly in the UI in the form of a hedging feature - the calculation is a bit complicated and I am not sure people would naturally go down the route of doing all the math to compute the amount to hedge”

To me, this should be prioritized and implemented before thinking about about adding more risky policies to the pool. Once this dashboard/UI feature is in place and users get an idea of the risk they are exposed to in the spartan bucket, they can make their own decisions in terms of levels they are comfortfable with.

Agreed! I think he can see this, but we can add some conversation in the discord about this too.

Hey EA and all - thanks for the proposal and I agree with the idea in general, but was hoping to discuss the below issues.

Of course, the only way to raise business development is to include more protocols within the bucket, so they can then insure and we can raise our metrics. What I am a bit concerned on is seeing an increase in yield (in the sense that more USF would be rewarded to capital providers), but without still having a medium to long term plan on what to do with USF token?

I think we should try to avoid a situation in which we raise the yield to an attractive level for big farmers to come take advantage of and just sell the token constantly.

Not sure if that makes sense but happy to hear everyones thoughts.

Thanks for the comment and appreciate your perspective.

while I understand your questions, I think given we are in the Carte Blanche period for the team, my thought is that the team can determine those thresholds in the near term to take advantage of the time defendant benefits and as a DAO, we can start discussing defining what the criteria should look like.

If you scroll up a little, you will see my more in depth thoughts based on a reply to similar questions from Gon, but at this point I personally see the benefits outweighing this need at the moment.

That being said, I think these are important consideration to take into account as we set up for the long term.

You can currently customize risk by supplying capital to the spartan bucket and then by cover for a policy you don’t want exposure to.

I think the in-line UI would be great!

I disagree on order of priority or how we approach these, but happy we are having good thoughtful discussion and ultimately think a vote will see how the community feels.

Thanks for the comment. When I am talking about yield, I was suggesting that given a medium risk policy would cost more than a low risk policy, it would increase ETH yield in terms of ETH for capital suppliers. Not that we would increase USF emissions based on this. Hopefully that helps to clarify.

That being said, I believe we are planning our first community call today to discuss token utility!