Provides USDTon the risk-taking side of the Project X Coverage Pool.
They are jointly entitled to 80% of all Premiums paid for Coverage against the Project X Coverage Pools in exchange for providing capital to the Project X Coverage Pool. The individual yield rewarded to a Coverage Provider is proportionate to the amount of capital they provided to the Project X Coverage Pool.
Upon a successful claim, the Claimant is reimbursed with funds provided by the Coverage Providers, up to their policy maximum. Coverage Providers share in the loss proportionately to the amount they contributed to the Project X Coverage Pool.
What risk do I bear when providing capital to a Coverage pool?
Your funds are used to provide coverage to Policy Holders for the particular Project X Coverage Pool. Suppose a claim against this pool is approved. In that case you might lose some or all of your funds in the pool, depending on:
The claim(s) payout's amount
% of your contribution to the Project X Coverage Pool
Reinsurance Pool's investment in the Project X Coverage Pool
Leveraged Portfolio's investment in the Project X Coverage Pool
How do I gauge the risk level of a pool?
A good indicator of risk is the utilization ratio of the pool. Recall that this is the ratio between the covers bought and the capital supplied to the particular pool.
A high utilization ratio implies that many users are willing to take insurance against the project, and few are ready to provide coverage. Hence the project is risky.
A high utilization ratio also implies that more of your funds are at risk. If a pool has a utilization ratio of 50% and all policies bought against the pool are claimed and approved in full, 50% of the capital in the pool will be distributed to policyholders.
On the flip side, high utilization ratio Coverage pools charge higher Premiums and generally have higher APY.
Please do your own risk assessment before putting money in any pool.
What does the "saturation" of the coverage pool mean?
Saturation represents the relation between the given BMIxCover token and USDT.
A 1:1 saturation means that 1 BMIxCover token is worth 1 USDT.
In case of any payouts, the pool's saturation can change.
USDT rewards come from Premiums paid by the Policy Holders, which increases the saturation. Coverage providers can claim the USDT yield by exiting the position and converting their bmixcover tokens to the USDT on the saturated rate.
How is the APY of a pool determined?
There are multiple components to the yield which Coverage providers can earn. Those components include:
Premiums from Policy Holders
BMI rewards for staking bmixCover
Rewards via Shield Mining (V2)
The following section is dedicated to Coverage Providing rewards in full:
BMb - pool’s reward multiplier (between 0.15 and 2) (calculated on UR without leverage)
Staked Pool - pool’s staked liquidity (bmixcover tokens)
BPD - chain’s blocks per day
RPB - chain’s reward per block
BMI_price - current BMI token price
PPR_x - pool percentage reward distribution ratio (0-100%)