# Guarantor **Audience:** Protocols and retail by extension. In purchasing covers, protocols and their users are encouraged to offer a portion of their token reserve allocated as a funds pool available for claims in the event of a smart contract hack. The allocated token reserve remains in custody of the depositors, earning premium yield until a smart contract hack event; in such an event, the claim will be assessed and if approved, the token reserves will be automatically issued to the cover provider(s) as collateral to the default event (a credit default risk event). This mechanism offers cover providers good faith in the protocol and collateral against the amount of cover sold. **10%** of the claimable amount against the token price day before the hack is distributed to the cover providers. The purpose of guarantor pool is to offer certain recovery for the reserve providers once a payout happens, which is important to support a healthy level of reserves taking a higher risk of providing coverage. **Benefit:** Guarantor pool earns **5%** of the cover premium paid for its guaranteed protocol + TIDAL token incentives. **Risk:** Under a payout event, **10%** of the claimable amount against the token price day before the hack is distributed to the reserve providers. E.g. 100k USDC total payout amount would result in 10k USD worth of tokens to be paid out to reserve providers. **Withdrawal:** withdrawal request will become pending next week, if no guaranteed protocol has any valid claims during the time frame, withdrawal amount will be returned to guarantor’s wallet. ### --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.tidal.finance/how-to-use-1/network-roles/guarantor.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.