Smart Contract Coverage

Definition: "Smart contract coverage is intended to protect a user from any permanent loss of funds caused by a hack, exploit, or rug pull."
What counts as a permanent loss?
A loss is presumed to be permanent when the protocol's team does not express a clear, reasonable, and immediate intent to reimburse those that have lost funds in proportionate to the value that was originally lost. If the reimbursement is not on par with the amount lost, a claim may still be valid.
If a protocol pays its users back in whole, the claim should be denied.
Loose or uncertain promises to eventually pay back users does not count as a reimbursement and should generally be ignored unless the protocol clearly states that they have the funds to reimburse all of its users and will do so soon.
What are funds?
Funds are any asset with a value that can be calculated and proven on a secondary market. The value of funds should be calculated at the time immediately preceding the coverable event (hack/exploit/rug pull).
Here are some example scenarios that are intended to be covered:

Hack: ABC Protocol experiences a hack wherein the ownership of a smart contract address was transferred to the hacker, and the hacker uses ownership powers to withdraw funds from all of the protocol pools. In addition to this, the hacker mints hundreds of thousands of tokens, devaluing the protocol token as a direct result of the hack. All users that had funds in any of the pools would be eligible for smart contract coverage; in addition, all users that had held any of the tokens would be eligible for smart contract coverage because the tokens devalued as a direct result of the hack.
Exploit: ABC Protocol experiences an exploit, wherein a user on the platform was able to repeatedly withdraw funds from a pool that did not belong to him, and the pool was left empty. All users that had funds in that pool would be eligible for smart contract coverage.
Rug pull: One or more controlling members of the ABC Protocol team "rug" the project; meaning that the team maliciously and purposefully did something that rendered their tokens or project useless (such as a complete sell off of tokens in their custody, which results in the draining of all liquidity or a complete collapse in value of the token), or the team steals user's funds that were deposited or staked in their platform. 
Here are some example scenarios that are not intended to be covered:
Secondary protocol gets compromised: ABC Protocol is a yield farming protocol that distributes user's funds into other secondary protocols that lend and loan capital to generate a yield. The goal of ABC Protocol is to maximize return for its users by altering its investment strategies in real-time. One of the secondary protocols that ABC Protocol uses to generate high yields is XYZ Protocol.
One day, XYZ Protocol is exploited and drained of all of its funds, and some users on ABC Protocol are affected. However, ABC Protocol itself was not hacked or exploited. In this case, users with smart contract coverage for ABC Protocol would not be covered, and their claims should be denied. Likewise, users with XYZ Protocol policies that were staking via ABC Protocol would be covered.
Price drop: ABC Protocol's token drops significantly in price due to natural market forces or a sell off from investors or team members.
Bridge exploit: ABC Protocol uses third party bridges to port its token from Ethereum to Binance Smart Chain and Polgyon. One of the bridges gets exploited, and a large number of ABC Protocol tokens are released from the bridge and get sold on secondary markets, sharply decreasing the price of the token.

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