# v2 Introduction
Cross-chain insurance marketplace with enhanced capital efficiency
## **Overview**
Tidal Finance has introduced its version 2 (v2), representing a significant evolution from its initial version. The platform now supports any third-party insurer or underwriter to host their own insurance pool, a significant departure from v1. This change democratizes the platform, promoting a more decentralized model by offering external parties the chance to underwrite and manage their own risk pools, thus increasing the diversity and flexibility of insurance offerings.
Moreover, the customization capabilities of insurance policies have been greatly enhanced in Tidal v2. Customers now have the option to tailor their insurance policies according to their unique needs, including pricing and duration. This move towards personalized insurance policies signifies a significant improvement from v1, making the platform more user-centric and adaptive to the varying requirements of different users.
In addition, v2 introduces the separation of collateral among insurance pools. This feature enhances the risk management process for insurers and underwriters, making it easier to manage risk associated with their respective pools. The collateral separation provides an individualized risk containment mechanism, which greatly reduces the possibility of widespread impact due to any single pool's failure, and is a considerable upgrade in terms of security and risk management from v1. Overall, Tidal v2 represents a major step forward in enhancing the platform's versatility, customer-centricity, and risk management efficiency.
The protocol is an insurance marketplace that is decentralized. It enables insurers/underwriters to launch insurance policies on-chain, protecting policyholders from risk and providing profit potential for liquidity providers.
Protocol participants include:
* Pool manager - underwrite policy, modify policy parameters, and submit claim
* Liquidity provider - As a liquidity provider, you can deposit collateral and earn a yield.
* Policyholders - Purchase insurance policies and pay premiums.
* Committees - vote on a claim, and propose and vote on a manager or committee member change.
The graph below depicts the relationships between protocol participants:
Network participants
## Vision
Tidal Finance v2 is committed to expanding the boundaries of blockchain-based insurance beyond just crypto-related cases, aiming to onboard a more diverse array of coverage policies to drive the broader adoption of decentralized insurance solutions. Our ambition extends to encompassing real-world insurance cases, reflecting our belief that the advantages of blockchain technology are not limited to the digital domain, but can be transformative in traditional sectors as well.
Our mission with v2 also centers on optimizing the traditional insurance processes, aspiring to save on overhead costs through the implementation of various modules on our platform. These modules will streamline key processes such as claim management, payment flow, and underwriting, among others. By leveraging the unique capabilities of blockchain, we aim to provide a more efficient, transparent, and cost-effective alternative to conventional insurance processes. In essence, Tidal Finance v2 seeks to break down the barriers between the traditional insurance industry and the blockchain world, fostering an environment where the best of both realms can be utilized for the benefit of our users.
## Resources
* [Discord](https://discord.gg/rZhuzJzXqV)
* [Telegram](https://t.me/TidalGlobal)
* [Twitter](https://twitter.com/tidaldefi)
* [Medium](https://tidalfinance.medium.com/)
# Problem Space
Several problems permeate the current market and result in mismatched supply and demand for DeFi insurance products
Here are some finding based on our research and analysis:
* The locked up pool of insurance reserve capital is underutilized and the long-term return on capital invested is low, and thus failing to incentivize reserve providers (RPs) to deposit capital into the reserve capital pool, especially compared to other more lucrative DeFi yield farming products. To raise the return on these depository instruments, insurance providers have introduced token rewards, which lacks long-term economic viability. Without the implementation of token rewards to artificially boost yield, insurance products struggle to reach a 1% APY from contract premiums.
At TIDAL Protocol, we believe in maximizing capital utilization and returns, and thus leverage must be increased by offering bundled insurance protocols with low correlation to increase the cover supply, at the same time controlling the risk of insolvency through multiple levels of reserves, and other risk mitigation practices.
* As a byproduct of the low efficiency of insurance capital, reserve providers raise the cost of insurance to increase the returns on their capital. As a result, the cover buyer must pay a higher rate for the insurance of their covered protocols than the underlying products themselves yield. TIDAL Protocol plans to offer highly competitive insurance premiums by allowing RP’s capital to get exposure to multiple protocols - driving down the price of each protocol’s premium while increasing the returns of RP’s capital.
The open market nature of TIDAL will greatly increase capital efficiency by offering leverage and customizable risk exposure portfolios. To minimize insolvency risk, auditors thoroughly vet each mutual cover pool to ensure the risk level is acceptable, and that the controlling parameters within each pool, such as reserve level, contract correlation and coverage period limitations, are in line with the product’s objective.
* Because of the high degree of uncertainty involved, coverage is often unavailable for most new smart contracts. As the DeFi space grows exponentially, the gap between market supply and demand is widening fast. To mitigate this problem, TIDAL will implement a "Guarantor" concept to provide additional capital to cover the risk. Guarantor capital will be used as the first source of funds to pay out the insurance claims ahead of capital supplied by regular reserve providers. This allows founders of new projects to act as Guarantors of their own project, earning yield from cover premium while attracting other regular LPs to provide coverage.
# Network Roles
The Tidal ecosystem consists of 4 primary actors
The protocol is an insurance marketplace that is decentralized. It enables insurers/underwriters to launch insurance policies on-chain, protecting policyholders from risk and providing profit potential for liquidity providers.
Protocol participants include:
* Pool manager - underwrite policy, modify policy parameters, and submit claim
* Liquidity provider - As a liquidity provider, you can deposit collateral and earn a yield.
* Policyholders - Purchase insurance policies and pay premiums.
* Committees - vote on a claim, and propose and vote on a manager or committee member change.
# Pool manager
In general, pool managers work as underwriters in the insurance ecosystem, forming contracts between insurer and policyholder. If a policy falls into default, the pool manager will also assist with the claim and payout processes. Detailed features include:
* Implement one or more policies.
* Set/change premium pricing for each policy.
* For each insurance policy, define/adjust the collateral ratio.
* Define or modify the collateral withdrawal lockup period.
* Define/adjust the management fee (a percentage of the premium).
* Define and change the withdrawal fee.
* Propose payout - From the collateral pool, deduct a proposed payout amount.
* In the event of an emergency, suspend the pool to safeguard the safety of the funds.
# Liquidity providers
Liquidity providers act as syndates, supplying insurance collateral in exchange for policyholder premiums. Depending on the policy design, the collateral amount is typically much less than the coverage capacity that it supports, resulting in a high earning ratio.
To ensure that sold policies have backup capital in the event of a default, withdrawing liquidity has a lockup term that is longer than the policy's maximum length. The exact withdrawal waiting term will be mentioned on the collateral contract in each pool. During the withdrawal period, liquidity providers might still earn premiums and face capital losses if a payout happens.
The capital loss is proportional to the entire asset value in the collateral pool. For example, if Bob's deposit is 10% of the overall collateral pool and 100 USDC are used for payout, his loss is 100 x 10% = 10 USDC.
# Policyholders
Policyholders are the people who purchase the insurance policy. Each insurance has an effective period, and policyholders are eligible for compensation if the policy is activated during the effective period.
If the required collateral amount falls below the outstanding insurance amount, policyholders are eligible for a return. A high payoff, for example, could set off such a scenario. The unprotected portion owing to a lack of collateral will be automatically reimbursed to policyholders' wallets every week until there are sufficient collateral deposits to cover the outstanding policies.
# Committees
In the insurance system, committees act as assessors, voting on the payout proposal given by the pool manager. Committees can also recommend changing the pool manager or adding or removing committee members.
# Premium Distribution
The premium collected from policyholders is automatically split into weeks and distributed to collateral providers and the pool manager every Sunday (UTC 00:00). For example, if Alice purchased 10 weeks of coverage for $100, 10 USD will be distributed every Sunday beginning the first Sunday after Alice's purchase, a total of ten times.
# Est. APR Calculation
Estimated APR = weekly earning percentage x 52
Weekly earning percentage = “premium distributed at the end of the previous week” divided by “collateral amount at the end of the previous week.“
# Claim and Payout
Claims can be submitted on-chain, and pool managers will be notified. To conduct a payout, the pool manager must submit a proposal that includes the payment amount and default policy, as well as the payment amount's receiving address.
The proposal will be verified and voted on by the committee members after it is submitted by the pool manager. If the proposal is accepted, the payment amount will be deducted from the collateral and transmitted to the receiving address automatically. If the proposal is denied, there will be no reduction from the collateral.
# Liquidity Provider Terms and Conditions
## Earnings:
Your total deposit is increased every week at UTC 0:00 Sunday by the earnings (premium paid by policyholders) from deposits.
## Withdraw:
Withdrawal requests are available at any time, up to the entire deposit amount, after which they enter a waiting period before being refunded to the depositor's wallet. Beginning the first Sunday at 0:00 UTC after the withdrawal request, there will be an 11-week waiting period. The withdrawal amount will be returned to the depositor's wallet right away after the pending period is over.
Even during the withdrawal time, the withdrawal amount is earning a premium. As a result, if more policies are purchased, the final receiving amount can be more than the required amount.
## Risk of deduction:
Throughout the deposit term and the waiting time before withdrawals, the deposits will be used to pay for valid claims. Depending on the size of the claim under the defaulted policies, these payouts could range from a small percentage to 100% of your capital. Depositors are urged to investigate the various types of insurance that the collateral pool is providing coverage for.
## Change of parameters:
The pool manager has authority over introducing and changing policies inside the pool, which can affect deposit profits and risks. The pool manager may also shorten or lengthen the withdrawal waiting period.
# Risks
**Loss of principal in case of payouts**
The reserve deposits (USDC, TIDAL token) will be used to compensate losses incurred by cover purchasers in case of a hack event in the respective covered protocol. Such payouts might use up a fraction to 100% of your deposits. Tidal makes no representation on the security of the protocols it offers to be insured. Cover providers must do their own due diligence and understand the risks associated with covering protocols they chose to provide cover for.
**Tidal codebase and its hack risks**
Tidal’s code has been audited by Peckshield and Halborn. The reports can be found here. The platform has also been under testing since the past 2 months. We treat security as the top priority. Despite these precautions, please beware that security audits don’t completely eliminate the risk of any form of hacks, security attacks, economic exploits, errors, failures or bugs on the Tidal protocol which might lead to loss of your deposits. The code, protocol and interfaces are provided on a best effort basis and Tidal takes no responsibility to guarantee its security or make refunds in case of losses due to use of the product.
**Forward-looking statements**
All statements contained herein may constitute forward-looking statements (including statements regarding the intent, belief or current expectations with respect to level of rewards, market conditions, business strategy and plans, risk management practices). You are cautioned not to place undue reliance on these forward-looking statements given that these statements involve known and unknown risks, uncertainties and other factors that may cause the actual future results to be materially different from that described by such forward-looking statements, and no independent third party has reviewed the reasonableness of any such statements or assumptions. These forward-looking statements are applicable only as of the date which this document is published, and Tidal expressly disclaims any responsibility (whether express or implied) to release any revisions to these forward-looking statements to reflect events after such date.
**Performance**
Tidal is not able to guarantee any specific APR or performance for participation in the Cover Mining Program. The value of rewards received by participants varies on many factors which are not within the control of Tidal or any party. In particular, the secondary market price for TIDAL tokens or any digital assets deposited may fluctuate unpredictably and unfavorably, and Tidal does not provide any guarantee or assurance as to the secondary market price of such TIDAL tokens.
**Risks arising from stablecoins**
Digital assets used for participation in the Cover Mining Program may include various “stablecoins” such as USDC. These stablecoins are designed to hold on to a specific value by pegging it to fiat currencies (such as the US dollar). These stablecoins require trust in the centralised entity issuing said stablecoins, and are therefore vulnerable to loss of peg and destabilisation from internal control/management issues as well as external geopolitical factors. Participants may suffer losses in the event of such loss of peg.
**Taxation**
The tax characterisation of TIDAL tokens and the rewards for the Tidal Cover Mining Program is uncertain. It is possible that a participant’s intended treatment of TIDAL tokens and the rewards from the Tidal Cover Mining Program may be challenged. The participant must seek its own tax advice in connection with TIDAL tokens and participating in the Tidal Cover Mining Program, which may result in adverse tax consequences to the participant, including, without limitation, withholding taxes, transfer taxes, value added taxes, income taxes and similar taxes, levies, duties or other charges and tax reporting requirements.
**Risks Associated with Uncertain Regulations and Enforcement Actions**
The regulatory status of TIDAL tokens, the Tidal Cover Mining Program and distributed ledger technology is unclear or unsettled in many jurisdictions. It is difficult to predict how or whether regulatory agencies may apply existing regulation with respect to such technology and its applications, including TIDAL tokens and the Tidal Cover Mining Program. It is likewise difficult to predict how or whether legislatures or regulatory agencies may implement changes to law and regulation affecting distributed ledger technology and its applications, including TIDAL tokens and the Tidal Cover Mining Program. Regulatory actions could negatively impact TIDAL tokens and the Tidal Cover Mining Program in various ways, including, for purposes of illustration only, through a determination that TIDAL tokens or the Tidal Cover Mining Program are a regulated financial instrument or insurance scheme that require registration or licensing. The Tidal Cover Mining Program may be required to immediately cease operations in a jurisdiction in the event that regulatory actions, or changes to law or regulation, make it illegal to operate in such jurisdiction, or commercially undesirable to obtain the necessary regulatory approval(s) to operate in such jurisdiction.
**Source of funds**
Tidal is a permissionless protocol on Ethereum. As a result, anyone is allowed to participate in the cover mining program. While we restrict users from the US and sanctioned jurisdictions from accessing the user interfaces hosted by us, users might still access the protocol directly via alternate interfaces. Consequently, we are unable to guarantee the origin of funds deposited in Tidal’s reserve pools. Cover purchasers should recognize that such funds could be used in case of payouts and Tidal makes no representation in guaranteeing whether the funds used to back the reserve pool were obtained from legitimate sources. Users agree to indemnify Tidal in case of any issues or losses that arise as a result of such transactions.
# Definitions
### **Policy capacity**
The amount of coverage that policyholders can obtain.
### Policy collateral
The amount of money available to back up the coverage. Policies in the same collateral pool share collateral, which is a common insurance concept known as fractional reserve. Because money will be earned from many policies, this design increases the return on collateral capital. More insurance also increases the likelihood of a payout (collateral deduction).
### Collateral ratio
The capacity of any insurance is determined by the amount of collateral and the collateral ratio. For example, if there are 100 USDC in the liquidity pool and policy A's collateral ratio is 0.5, policy A's capacity is 200 (100 / 0.5), which means policy A can cover up to 200 USDC for policyholders at any given time.
### Weekly premium
The weekly premium is the payment made by policyholders to the collateral pool on a weekly basis. The goal of gradually adding premium is to allow more liquidity sources to participate in the collateral pool while sharing risks. It also generates a dynamic yield curve that allows LPs to forecast their potential earnings.
### LP earnings
Each insurance policy has its own premium, which generates the profitability of the liquidity pool. Policyholder premiums will be directly paid into the liquidity pool, allowing liquidity providers to earn a percentage of the pool's deposit assets. The premium is paid out every week, and the LP can start receiving money as soon as the asset is placed.
### Premium refund
If the collateral amount is insufficient to cover the outstanding purchased insurance, policyholders are repaid the uncovered amount every week. The uncovered amount for each policyholder is derived by multiplying his or her individual coverage vs. total coverage by the total uncovered amount.
E.g. Assume Bob has 100 USDC in coverage and the total coverage of all policyholders is 1,000 USDC. In the case of collateral deduction, the maximum coverage is reduced to 400 USDC (600 USDC as total uncovered), and Bob's uncovered amount is 600 x 10% = 60 USDC.
### Insolvency
When collateral is insufficient to fund all triggered payouts, the pool becomes insolvent. A large leveraged pool (insurance coverage amount is significantly greater than collateral amount) and concentrated risk among policies (many policies triggering default at the same time) could lead to a high possibility of insolvency. Tidal, as a protocol layer, will enable transparency into the state and suggestions of each pool.
### Withdraw pending period
The duration of the policy is determined by the liquidity pool's withdrawal pending period, which is adjustable by the pool management. A short withdrawal pending period can only support short-term policies, but a long withdrawal pending period can support long-term policies.
### Management fee
As a management fee, a portion of the premiums can be directed to the pool manager.
The cost is optional, and the pool management may adjust it at any time. The goal of this type of design is to encourage pool managers to control liquidity and policy.
### Management collateral fee
A percentage of the premium can be directed to the pool manager’s share in the collateral pool.
The fee is optional and can be changed at any moment by the pool manager. The goal of instituting a management collateral fee is to gradually increase the insurance pool's treasury through premium earnings. The treasury can provide a solid platform for policy backup as well as a source of funds for other investment options.
### Withdraw fee
When liquidity providers remove capital, a % fee is paid. The charge is reinvested in the collateral pool as earnings.
The fee is optional and can be changed at any moment by the pool manager. The implementation of a withdrawal charge is intended to motivate LPs to keep their investments and stabilize the collateral amount.
# V2 Audit Report
### June 2023
{% file src="/files/Px19PqyVhkDwGL0ZFLUp" %}
Consensys Audit
{% endfile %}
### May 2023
{% file src="/files/D3uFdiSBUkibaE75s1m2" %}
BlockSec Audit
{% endfile %}
# Original Whitepaper
Download the latest whitepaper
{% hint style="warning" %}
Because of the rapid development and learning from user suggestions, some sections in the whitepaper may be outdated.
{% endhint %}
Above is the beta version of Tidal's whitepaper. The whitepaper will be updated once we have a stable version of Tidal Finance ready in the future.
# Token Economics
TIDAL is the native protocol token of Tidal
## Overview
The TIDAL token is a standard ERC-20 token which will in future be migrated to a Polkadot-based smart contract platform such as Moonbeam or Plasm. Details of a token swap will be announced in due course. Token distribution and vesting schedule are listed below for reference, details are subject to changes.
### Specs
| Token Name | Tidal Governance Token |
| ------------ | ---------------------- |
| Token Ticker | TIDAL |
| Token Type | ERC-20 |
| Token Supply | 20,000,000,000 |
| | Unlock Schedule |
| ----------- | -------------------------------------------------------------------------------------------------- |
| Seed | 20% day 14, rest equally spread with 2nd unlock 9 month after TGE, 3rd unlock 12 months after TGE |
| Strategic | 25% day 14, rest equally spread with 2nd unlock 9 month after TGE, 3rd unlock 12 months after TGE |
| Private | 30% day 14, rest equally spread with 2nd unlock 9 month after TGE, 3rd unlock 12 months after TGE |
| Pre-Sale | 30% day 0, rest equally spread with 2nd unlock 9 month after TGE, 3rd unlock 12 months after TGE |
| Public Sale | Fully unlock |
| Team | 1 year cliff, rest linear over 48 months |
| Advisor | 1 year cliff, rest linear over 48 months |
## Token Distribution
# Capital Management
There are primarily two types of funding related challenges for TIDAL Protocol, one is bootstrapping reserve capital for newly created mutual cover pools, and the other is maintaining solvency in the case of covered protocol failures and claim payouts.
# Reserve Capital Bootstrapping
One of the main problems that TIDAL Protocol is trying to solve is the lack of accessible insurance products in the rapidly evolving DeFi market.
Due to the nature of DeFi, newly created platforms, protocols and assets can be self-published at lightning speed, around the clock. It’s very difficult for a centralized auditing authority to keep up with the speed, and breadth of the DeFi market.
Thus, in order to provide insurance coverage to DeFi products, TIDAL must provide the proper incentives for bootstrapping reserve capital in any liquidity pool in a decentralized fashion. Liquidity mining will be adopted as the capital bootstrapping incentive program.
One of the major TIDAL innovations is introducing the Guarantor’s concept and creating multiple levels of capital reserve: Guarantor’s Reserve, USDC Reserve and Tidal Staking Reserve.
Every protocol covered by TIDAL will be encouraged to seek Guarantors to stake Guarantor’s Reserves. In case of any payout Guarantor’s Reserves will be used to compensate USDC reserve. Guarantor’s will be compensated for the risk they are taking by collecting a percentage of all premiums paid for specified coverage. TIDAL Protocol will incentivize the teams behind protocols to provide Guarantor Reserve, creating a positive synergy for other reserve providers to feel more confident in providing additional liquidity.
# Dynamic Capital Adjustment
Reserve providers are allowed to withdraw reserve capital, as the intial launch, there is no contraints on withdraw other than a up to 14 days pending period. As the ecosytem grow, limitation such as limiting the withdraw amount when the sold cover amount is below a certain threshold of the reserve providers' capital, will be implemented to stablilize the supply and demand.
The maximum leverage of exposure will be dynamically adjusted over time depending on the risk to hacking and other forms of attacks, as well as the number of protocols covered by mutual cover pool. The leverage should be increased as more protocols become mature on the market.
# Fees and Funding
### Brokeage Fees
For initial launch, 5% of the cover premium is saved at a tempoary treasury account to support claim committee handling claims, as well as assessing and managing the risks of each protocol in the mutual cover pool. It is a relatively small amount considering the inital market size at launch. But it would be a necessary component to support security risk experts for the overall growth of insurance market.
# v1 Introduction
Cross-chain insurance marketplace with enhanced capital efficiency
## **Overview**
TIDAL is a decentralized discretionary mutual cover protocol that offers the DeFi community the ability to hedge against the failure of any DeFi protocol or asset. By directly leveraging up the reserve to cover multiple protocols at the same time, the enhanced capital efficiency attracts reserve providers while a competitive insurance premium attracts buyers.
Tidal primarily consists of cover (insurance) buyers and reserve providers. Since pure peer-to-peer matching platforms on an individual bases have failed to gain traction in areas related to both lending and insurance, Tidal *pools* capital from reserve providers to offer covers to buyers. This allows for higher capital efficiency as the same reserve backs more covers than can be individually paid out and also eliminates a peer matching process resulting from double coincidence of wants.
Capital pooling is known to be very efficient as well as effective as the probability of every protocol that an insurance provider covers is very low. However, this also requires proper risk management to reduce the chances of bankruptcy and consequent default on the insurer's front while also charging insurance purchasers an appropriate premium to account for the risk they transfer to the insurer.
Tidal achieves this balance by maintaining the *Mutual Coverage Pool* which is a collection of protocols that its reserves back. When a cover seller (also called a reserve provider) adds capital to an Mutual Coverage Pool, he chooses one or more protocols his capital should cover. The more protocols he chooses to cover, the higher is his income as he receives premiums from each of them. Similarly, his risk increases proportionately as an incident with any of the protocol covered leads to the reserve provider losing his share in the reserve to a payout (following a successful claims process). An cover buyer can rest assured that the capital backing his cover is only over-leveraged to the extent of the protocols in the same Mutual Coverage Pool.
All Mutual Cover Pools are initially designed by the development team. However, as the protocol matures we expect the DAO to be able to make such decisions.
## Vision
Interactions with smart contracts carry several risks and this risk is unlikely to ever be completely eliminated. After all, in over three decades of the web's existence, we still haven't gotten risks of viruses, malwares and other cyber security risks. However, unlikely the web, smart contracts natively store millions and collectively billions in value. Due to human error or zero-day vulnerabilities, we expect users of decentralized apps to always be at a risk of losing their assets stored in such platforms leaving them in a state of constant fear and reducing adoption at large.
Our vision is to cover every Web 3 user against the risk of any intentional or inadvertent smart contract attack or bug. We aim to do so by efficiently allocating capital and managing risks such that cover buyers need to pay as low a premium as possible while insurance sellers gain competitive interest rates for the risks they undertake.
Ultimately, while we think Web 3 in itself has a large market size which will only grow with time, it is also belief that the transparency and equal opportunity offered by blockchains and open-source composable protocols such as Tidal are well placed to outcompete traditional monolithic institutions. Insurance companies are fraught with tedious claims processes and issues related to mismanagement of capital. Tidal, in the long term, will not only cover smart contract related incidents but will also seek to disintermediate the trillion-dollar traditional insurance business with it s crowd-sourced risk management models and capital pool.
## Features
Tidal offers a number of innovative and unique features:
* **Over-leveraged mutual coverage pools**\
A set of protocols all backed by a common over-leveraged reserve to increase capital efficiency.
* **Auto renewals coverage plan**\
Cover buyers can pre-fund their wallets and have their cover be auto-renewed on a weekly basis.
* **Guarantor Staking Pool**\
Each protocol in the mutual coverage pool has its own gaurantor staking pool. Protocol team and their token holders can stake tokens to compensate reserve providers under payouts solely related to their own protocol. In return, the guarantor pool recerives both premiums of cover sold against their protocol, as well as Tidal mining rewards.
* **Tidal Staking Pool**\
Tidal tokens can be staked in a pool to act as another compensation source to the reserve providers for Tidal staking rewards.
## Resources
* [Discord](https://discord.gg/rZhuzJzXqV)
* [Telegram](https://t.me/TidalGlobal)
* [Twitter](https://twitter.com/tidaldefi)
* [Medium](https://tidalfinance.medium.com/)
# v1 Solution Overview
TIDAL is a decentralized discretionary mutual cover protocol that offers the DeFi community the ability to hedge against failure of any DeFi protocol or asset.
With TIDAL, mutual cover pools can be created where Reserve Providers (RPs) can stake their stable coins to provide reserve capital to any pool. They receive the following two incentives in return: \
1\. Stable coin premium paid by cover buyers;\
2\. TIDAL governance tokens as an additional incentive for participating in the TIDAL ecosystem.
Within the ecosystem, RPs can select a pool with a combination of different protocols/tokens they wish to cover and provide capital to that mutual cover pool. Cover buyers can purchase the mutual coverage token for any specific protocol/token specified in any of the cover pools.
For cover buyers, key metrics such as premiums, reserve capital pool and pool insolvency risk will be available to ensure full disclosure and transparency. These parameters are monitored perpetually to ensure the highest degree of quality and safety.
# v1 Network Roles
The Tidal ecosystem consists of 4 primary actors
Anyone interested in joining the Tidal ecosystem can choose to participate in one or more of the following three capacities:
### Reserve Provider
Reserve providers are users that are staking their stable coins (USDC) as insurance reserve capital with the intention to generate premiums on their capital in exchange for providing coverage for specified insured event(s), if there is no, or a low rate of, protocol failure.
### Cover Buyer
Users or entities who wish to cover their assets (TVL) in TIDAL Insurance Coverage Pool. They are the equivalent of insurance policyholders, and are the beneficiary of the payout policy of the cover token purchase (in the event of successful claims assessment).
### Guarantor
Guarantors will be able to stake in Guarantor’s Reserves to guarantee a given protocol. Such reserves will be used to compensate reserve providers in the event of paying out a valid claim against the guaranteed protocol, as well as receiving extra yield - a percentage of all the premium sold for the guaranteed protocol. Protocol teams will be incentivized to provide Guarantor Reserves for their own protocols.
### TIDAL Staker
TIDAL token holders can stake TIDAL. The staking pool is designed to earn additional TIDAL token as well as supporting the platform's growth by taking certain risks of a payout event - Certain percentage of the staking pool will be used to compensate reserve providers whose capital were reduced during the payout.
# Reserve Provider
### **Reserve Provider**
**Audience:** Funds or individuals looking for high yield products and confident with low default (hack) risk for the protocols they are providing reserves for. Stake stable coin (USDC) as insurance reserve capital with the intention to generate premiums on their capital in exchange for providing coverage for specified insured event(s), if there is no, or a low rate of, protocol failure.
**Benefit:** Tidal will be offering structured, pre-determined mutual cover pools for the cover providers earning high yield. Cover providers can customize their selections of the protocols they feel confident and provide cover for, earning **90%** of the premium from cover buyers, + TIDAL token incentives (refer to cover mining program). The reward is distributed on a weekly basis.
**Risk:** Stable coin reserve pool will be used to compensate for a valid claim. Cover providers’ capital will be reduced proportionately by the percentage of their position in the pool. The total payout amount in the event of a smart contract hack is up to the lower of the (a) amount of loss due to the hack and (b) the cover purchased.
**Recovery:** We truly believe that cover providers are taking a high risk in the early stage of DeFi development, mainly due to lack of historical data and unknown risks in various hack events. Therefore, in addition to earning high yield from cover premium and TIDAL token incentives, couple recovery mechanisms are also designed to accommodate cover providers. 1. Recovery from Guarantor Reserve. 2. Recovery from TIDAL staking pool. Withdrawal: withdrawal request will become pending next week, if no staked protocols have any valid claims during the time frame, withdrawal amount will be returned to cover providers wallet.
**Withdrawal:** withdrawal request will become pending next week, if no selected protocols has any valid claims during the time frame, withdrawal amount will be returned to reserve provider's wallet.
# 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.
###
# TIDAL Staking Pool
**Audience:** TIDAL token holders. TIDAL staking pool is designed to earn additional TIDAL token as well as supporting the platform's growth by taking certain risks of a payout event.
**Benefit:** Pre-determined TIDAL token reward will be emitted on a per block basis.
**Risk:** After the governing risk team clears and validates a hack has happened, the payout process begins. TIDAL staking pool comes into play at this stage to provide collateral to the cover provider(s) in question. The staking collateral provided by Tidal is TIDAL tokens valued at **lessor of $100k USD or 10% of the total claimable amount** (TIDAL token valuation date of the day before the hack).Withdrawal: withdrawal TIDAL token from staking pool takes 14 days. During the 14 days, token holders are still earning the reward while taking the risk of getting slashed when payout happens.
**Withdrawal:** withdrawal has a pending period of 14 days, if no protocol has any valid claims during the time frame, withdrawal amount will be returned to staker's wallet.
# Cover Buyer
**Audience:** Protocols and retail by extension, Funds with large stakes in protocols. Tidal Finance aims to play the role of a leading facilitator of discretionary mutual cover for DeFi protocols to protect their retail consumers and support sustainable longevity in protocol growth through trusted risk mitigation. Funds are available to support a certain, pre-determined claim amount for TVL in the event of a smart contract hack, which will be paid out once the governing body approves such a claim. Cover is sold to the protocol B2B, with a dashboard available to the protocol team and tidal tech support for backend integration for the protocol’s B2C cover purchase.
**Benefit:** Under a hack, protocols can quickly recover the loss. The payout to cover buyers normally takes less than 2 weeks to process.
**Risk:** Since the USDC reserve is shared across multiple protocols, in the event of multiple pools being hacked in a short time window (i.e. one week) - the governing body has the discretion to determine the priority of payouts (usually in the order of hack events up to all claimable available reserves).
**Cover Amount Adjustment:** Cover amount can be adjusted weekly with a weekly payment schedule. The maximum coverage amount is capped at the reserve level to ensure the payout amount. Any over purchased amount cost will be automatically returned to the buyer's wallet.
# Premium Distribution
* **90%** of the cover premium is paid to the cover provider
* **5%** of the cover premium is paid to the guarantor pool
* **5%** of the cover premium is paid to the temporary treasury
*\*\*Temporary treasury funds will not be utilized at initial launch. The cumulative reward could be used for the risk management and assessment committee and initial payout pool as the size of the fund grows.*
# Payout Flow
Payout flow between different stakeholders
* **Reserve (Cover) provider** pays USDC to cover buyer under a payout event.
* **Guarantor pays guarantor** tokens to reserve providers under a payout event.
* **TIDAL staking pool** pays TIDAL tokens to reserve providers under a payout event.
# Claim and Payout
The claim and payout process in the Tidal protocol is carried out in a decentralized fashion. Starting with a claim being filed to put the relevant reserve asset into lock, the committee then approves and moves the claim to the voting process which asks TIDAL token holders to exercise their governance power.
DAO will evaluate the submitted proposal and execute its decision-making power based on a heuristic approach, considering various factors including the type of claimed incidents, the coverage scope as initially agreed-upon, and the interpretation of the Tidal cover terms. Once the request is passed by DAO, the claim committee will perform the final approval and proceed to pay the damaged users in accordance with the amount being approved.
At initial launch, the claim committee consists of the core dev team and security experts from halborn. With platform growth and maturity of DAO, the claim committee will be expanded and incentivized to have larger participation from the community**.**
### **Process of filing and approving a claim**
1.Cover buyer (partnered protocol team or funds) files a claim. *\*\*Must submit a claim within 3 days of the incident.*
2\. It will start a request in the Claim Assessment Committee.
3\. Claim Assessment Committee votes for the request. (all 4 votes need to pass to go to next step and the reserve pool of the claimed protocol will be temporarily locked) *\*\*There are currently 4 committee accounts. 2 from Tidal team and 2 from Halborn team. More committee members with auditing skills could be added through DAO in future.*
4\. Token holder can stake 2,000,000 TIDAL tokens to create a proposal for the payout amount, the proposal contains a trusted receiver address (committee held multisig) for the payout. *\*\*The proposal itself should contain executable code about payout details to deduct from each reserve pool (amount of USDC, amount of TIDAL, amount of guarantor token).*
5\. DAO evaluates the description of the proposal and the executable code contained in it, and votes to pass the proposal (72 hours). Current minimum voting threshold is 5,000,000 TIDAL counts and pass ratio is 50%. if Yes -> go to 6, if no -> go to 4 to re-file a new proposal.
6\. The executable code will go through “Timelock” to create a request of the approved amount and trusted address in the Claim Assessment Committee (after 24 hours of Timelock).
7\. Committee votes to approve the request. Yes -> go to 8. No -> go to 4 to re-file new proposal.
8\. Once passed, the amount will immediately be deducted from the reserve pool, and paid to the trusted receiver address held by the claim committee; and the locked reserve pool in step 3 will be unlocked.
9\. The trusted receiver will payout to the damaged user (USD amount pay to protocol team, guarantor token and TIDAL token pay to reserve providers proportionally according to their loss).
# Cover Policy
**I. Overview**
The purpose of this document is to illustrate the general terms and conditions of Tidal insurance coverage. It serves as a reference document for any platform users, cover buyers, reserve providers, token holders, claim accessors, and all other relevant community stakeholders. Please be noted that this guideline is not hardcoded into the Tidal Protocol.
**II. Coverage**
Subject to the Exclusion Section, the claim shall be payable for any one of the followings:
1. The designated smart contract was used in an unintended way; or
2. The designated smart contract suffered hacks or exploitation of the protocol code for any bug that was not publicly disclosed before the coverage period began; or
3. The designated smart contract suffered economic design failure (including flash loan attacks) resulting in the unintended confiscation or seizure of funds deposited; or
4. The designated smart contract suffered severe oracle failure where the oracle price is deliberately manipulated or materially different from the intended data source; or
5. The designated smart contract suffered a governance attack where the on-chain governance system was manipulated and resulted in the unintended alteration of the designated protocol.
6. Under a valid claim, up to 10% of the coverage amount can be claimed as fund recovery expense, including engaging security services and issuing bounties to trace the hacker.
For example, if the total covered amount is 1 million USD, upto 100k can be claimed from an insurance policy to cover the fund recovery expense.
7. De-pegging: when insured assets, e.g. UST, trade below $0.85 on a 5 day time weighted average price. Policyholders can exchange any amount of insured UST to collateral stable coin, e.g. USDC.
8. undercollateralized loans - in collabration with NAOS finance beta insurance pool: the Borrower does not pay on the Due Date any amount payable pursuant to a Finance Document at the place at and in the currency in which it is expressed to be payable and the Borrower fail to correct within 14 days after the Due Date.
**III. Exclusion**
The claim is not payable for any one of the followings:
1. Loss of funds occurred due to phishing, private key security breaches, malware, scam, or any negligence on behalf of the user; or
2. Hacks occurred during the coverage period with the exploited bug of the designated smart contract being sufficiently publicly disclosed prior to the beginning of the coverage period; or
3. Rewards or incentives were not to be distributed to a user(s) wallet address; or
4. An attack, manipulation, or exploitation was executed entirely or partly by the insured party; or
5. Loss of funds occurred where the designated protocol continued to operate as intended.
6. Loss of fund is due to a 3rd party protocol instead of the insured protocol.
7. Loss of fund is due to new smart contract development / updates which were not added to the coverage policy. (Any new development and updates are required to be reported to tidal, and added to the coverage policy once passed the assessment.)
**IV. Requirements**
For a claimant to be eligible of submitting a claim, the followings must be met:
1. The event or loss happens during the coverage period.
2. The payout receiving account and amount is validated by victim protocols, paid directly to the victim protocol team’s verified account that purchased cover.
**V. Returned Fund**
If the exploited fund gets returned, the returned amount to Tidal reserve providers would be:
Return amount = “Claimed (paid out) Amount” - “Protocol Net Loss” - “Fund Recovery Expense (occurred under **coverage section** number 6)”
Protocol net loss = Exploited Amount - Returned Amount.
For example, if the fund gets 100% returned, protocol net loss would be 0, then the returned amount to Tidal reserve providers would be the amount paid out less the fund recovery expense.
# How to use
# Provide USDC Reserves
Providing USDC to the reserve pool is one of the crucial actions performed in Tidal Finance protocol. It offers a great opportunity for providers to earn premium and $TIDAL tokens in exchange for undertaking the risk of potential claim payout. In addition to the $TIDAL tokens rewarded, 90% of the premium paid by the cover buyers are allocated to the reserve providers.
USDC needs to be held in metamask on polygon network to participate in USDC reserve pool. How to transfer token from ethereum to polgyon please refer to "Transfer Token to Polygon" section.
### **Step 1：Deposit USDC in Pending Deposit**
To provide reserve, users must first deposit USDC into the Pending Deposit which will not become immediately effective until the beginning of next epoch (or week). Users are free to change the amount in their Pending Deposit until their pending deposit is added into My Reserve which represents their pro rata shares in the leveraged reserve pool.
First, you need to approve the deposit action if this is your first time depositing USDC. Click the “Deposit” button on the Provide Reserve Page and click “Approve” on the pop-up window. Click “Sign” on the pop-up Metamask window, and Biconomy will handle the rest with no need for you to pay the transaction fees.
After the approval, you can deposit the desired amount of USDC into your Pending Deposit. Click the “Deposit” button, enter the amount you’d like, and click “Update”.
**Step 2: Select Protocols in Basket**
After depositing USDC in their Pending Deposit, users must also select protocols in the Basket. Doing so, users elect to provide coverage for the selected protocols and receive the premium in return. Failure to do so will prevent users from earning the premium for their deposited reserve. On the other hand, the more protocols a user selects, the bigger risks she assumes, and the higher APR she benefits.
First, click the "+" sign button under the Current Basket. Then, click the "stake" button for each protocol that you'd like to provide coverage for. Click the "Update" button to call the Metamask pop-up window. Click “Sign”, and Biconomy will handle the rest with no need for you to pay the transaction fees.
### **Step 3: Pending Deposit & Basket**
It is important to understand your Pending Deposit won’t become immediately effective. On one hand, you need to wait until the beginning of the next epoch of the insurance policy (or next week) to begin to earn the premium and $TIDAL reward. On the other hand, you will not immediately assume the risk of the current insurance epoch, and thus you can still reduce or increase the amount of USDC you will dedicate to the reserve pool.
For the same reason, the selected protocols in your Basket won’t become immediately effective until the beginning of the next epoch. During this pending period, you can keep adjusting and updating the “basket” of the protocols you’d like to provide coverage for.
### **$TIDAL Rewards (Cover mining program)**
With TIDAL’s initial launch, early Reserve Provider adopters will get weekly rewards by depositing USDC into the cover pool. 4,750,000 TIDAL tokens (\~0.02% of total supply) will be distributed on a weekly basis across the mutual pool. Reward incentives could be adjusted to maintain the healthiness of the reserve pool.
### **Withdraw**
The USDC Reserve deposit stays in the discretionary mutual pool at a period of the reserve provider's discretion. Withdrawal takes upto 14 days to become effective in your wallet. During the pending period, reward is still being earned on a weekly basis.
### **Risks**
Loss of principal in case of payouts - The reserves will be used to compensate losses incurred by cover purchasers in case of a hack event in the respective covered protocol. Such payouts might use up a fraction to 100% of your deposits. Tidal makes no representation on the security of the protocols it offers to be insured. Cover providers must do their own due diligence and understand the risks associated with covering protocols they chose to provide cover for.
For other risks please refer to the [**risk section on gitbook.**](https://docs.tidal.finance/getting-started/risks)
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# Provide Guarantor Tokens
Guarantor pool is designed to take insured parties team token as collateral in case of a payout event, in return getting 5% of the stable coin (USDC) premium reward of the insured party, as well as TIDAL incentives.
The more protocol tokens are allocated to the guarantor insurance pool, the greater confidence the public attributes to the safety of their crypto TVL staking activity. At Tidal Finance we facilitate this through incentivizing the guarantors with a certain amount of $TIDAL tokens, while also using these protocol tokens to collateralize the reserve providers USDC capital in the insurance pool. 10% of the claimable amount against the token price day before the hack is distributed to the reserve providers.
Token needs to be held in metamask on polygon network to participate in the guarantor pool. How to transfer token from ethereum to polgyon please refer to "Transfer Token to Polygon" section.
### **Step 1：Deposit tokens in Guarantor Pool**
To deposit guarantor tokens, user can navigate to the gaurantor page and select the protocols they wish to back up. Deposit will not become immediately effective until the beginning of next epoch (or week). Users are free to change the amount in their Pending Deposit until their pending deposit is added into My Balance which represents their pro rata shares in the leveraged reserve pool.
First, you need to approve the deposit action if this is your first time depositing any guarantor token. Click the “+” button and click “Approve” on the pop-up window.
After the approval, you can deposit the desired amount of tokens into your Pending Deposit. Click the “Deposit” button, enter the amount you’d like, and click “Update”.
### **Step 2: Pending Deposit**
It is important to understand your Pending Deposit won’t become immediately effective. On one hand, you need to wait until the beginning of the next epoch to begin to earn the premium and $TIDAL reward. On the other hand, you will not immediately assume the risk of the current insurance epoch, and thus you can still reduce or increase the amount of guarantor tokens you will dedicate to the reserve pool.
### **$TIDAL Rewards (guarantor mining program)**
With TIDAL’s initial launch, early Reserve Provider adopters will get weekly rewards by depositing guarantor tokens into each pool. Up to $115 USD value of TIDAL tokens (\~19,000 TIDAL at price $0.006) will be distributed on a weekly basis into EACH guarantor pool, accumulating to an approximately 6% APR for the 100,000 USD value provided by guarantors.
The reward amount is designed to bootstrap approximately 100,000 USD guarantor tokens backing up each protocol.
### **Withdraw**
The guarantor deposit stays in the discretionary guarantor pool at a period of the guarantor provider's discretion. Withdrawal takes upto 14 days to become effective in your wallet. During the pending period, reward is still being earned on a weekly basis.
### **Risks**
Loss of principal in case of payouts - The reserves will be used to compensate losses incurred by cover purchasers in case of a hack event in the respective covered protocol. Such payouts might use up a fraction to 100% of your deposits. Tidal makes no representation on the security of the protocols it offers to be insured. Guarantor providers must do their own due diligence and understand the risks associated with covering protocols they chose to provide cover for.
For other risks please refer to the [**risk section on gitbook.**](https://docs.tidal.finance/getting-started/risks)
# Transfer Token to Polygon
USDC, TIDAL, our partner team native tokens
Tidal v1 is deployed on polygon, depositing USDC to provide reserve, staking TIDAL, voting with TIDAL, and providing other native team tokens in the gaurantor pool would require tokens to be transferred from ethereum mainnet to polygon (MATIC) mainnet. Below is a step by step instruction on how to transfer TIDAL. The instruction applies to all other tokens with similar steps.
The process may take around 15 minutes to complete with few transcation fees. But once on polygon, there are no more transcation fees to use USDC and TIDAL on the platform. ✌✌✌
### **Step 1: Use Metamask to log in to the Polygon Wallet**
Go to the Polygon Web Wallet V2 on . Click “Metamask” and “Sign” on the Metamask window to log in to the Polygon Wallet.
### **Step 2: Initiate the transfer on the Polygon Web Wallet V2**
Once connected, click “Move funds from Ethereum to Polygon”, select “Tidal Token”, enter the amount you want to transfer, and click “Transfer” to open the transfer pop-up window.
### **Step 3: Authorize and start the transaction**
Click “Continue” on the window pop-up to start the process. The pop-up window displays the transaction details and the associated gas fees. Click through all of them, but make sure your MetaMask Network is on the Ethereum Mainnet before clicking the “Continue” button to start your transfer.
If you haven’t previously approved the transfer of the $TIDAL token, the Polygon Wallet will first ask you to authorize the spending of your $TIDAL token. Click the “Confirm” button on the MetaMask window when it opens up to approve the authorization.
### **Step 4: Pay the transaction fee and monitor the transfer progress**
Click “Continue” to confirm the deposit of your $TIDAL tokens, and pay the transaction fee on the MetaMask window. Then wait for the transaction to be completed. After the transaction is confirmed, it could take several minutes to complete the deposit.
### **Step 5: Transfer completed**
When the transaction is completed, you will see the screen as shown below. And you’ve successfully transferred your Tidal tokens from Ethereum to Polygon Mainnet. Now you are ready to participate in the Tidal protocol on Polygon Network**!**
Add TIDAL polygon token address 👇👇👇 to your metamask to see the correct balance display *0xB41EC2c036f8a42DA384DDE6ADA79884F8b84b26*
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# Stake TIDAL
Tidal Finance is currently providing a total of 12,540,000 $TIDAL tokens every month to reward staking pool. This incentive will be set at launch to reward the staking pool, reward will be distributed per block.
TIDAL token needs to be held in metamask on polygon network to participate in the staking pool. How to transfer token from ethereum to polgyon please refer to "Transfer Token to Polygon" section.
**Risk of Staking**
Please be noted that your staking is subject to the financial risk of losing shall a claim be approved.
Potential loss incurred during a payout: After the governing risk team clears and validates a hack has happened, the payout process begins. Staking pool comes into play at this stage to provide collateral to the reserve provider(s) in question. For mainnet launch, staking collateral provided is $TIDAL tokens valued at lessor of $100k USD or 10% of the total Tidal claimable amount (tidal token valuation date of the day before the hack).
Payout function of the staking pool is created to support tidal platforms growth by mitigating initial reserve providers’ loss. It is important for tidal’s platform to bootstrap USDC reserves especially at the beginning.
For other risks please refer to the [**risk section on gitbook.**](https://docs.tidal.finance/getting-started/risks)
**Unstake**
Users can unstake their $TIDAL tokens at any time. Please note that the unstaking process is subject to a 14-day lock-up period. During the 14-day lock-up period, stakers are still entitled to receive their staking reward for their staked Tidal tokens until the unstaking becomes effective, as well as taking the risk of getting slashed under a valid claim.
**Staking parameter setting**\
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The staking process is based on the following formula:
Staking APR = RPB X BPY / TTS
Where
\- RPB = (Tidal tokens) Reward Per Block
\- BPY = Block Per Year
\- TTS = Total Tidal Staked
[**As seen in the code of staking contract**](https://github.com/TidalFinance/tidal-contracts/blob/main/contracts/Staking.sol)**:**
Please be noted that the APR formula given above represents the current APR. And it does not involve any interest-compounding mechanism. The reward amount (APR) can be adjusted by calling a function and tuning the RewardPerBlock parameter in the smart contract. Depending on the staking amount and USDC reserve amount, reward amount shall be adjusted to best support the ecosystem growth.
# Buy Cover
Individual Plan
Tidal platform provides inidviduals coverage through their own project teams, offering end users an more emersive experience comparing to purchasing from a 3rd party. Payout will be handled together with insured project teams based on each individual's damage and coverage, saving the headache of each individual to keep up with the claim filing process.
Users can use “USDC” or “Native token” (if availabe from the insured protocol) to get covered. By setting up a payment account and desired coverage amount, users can initiate their coverage plan on a weekly subscription basis.
Users can withdraw or deposit from they payment account at any time, as well as adjust the coverage amount at any time.
As long as there is enough balance in the payment account, the coverage plan will automatically continue. If there is not enough balance, the coverage plan will be suspended and reactivated as soon as there is enough balance.
In an effort to keep gas costs low for our customers, the coverage purchase feature is currently supported on the polygon network with other L2 solutions to follow.
Users can access the purchasing site from the insured protocol's site. Below are the purchasing steps by using the StaFi protocol's portal as an example: **StaFi.tidal.finance**
### 1. Buy Cover with USDC
First, you need to approve the deposit action if this is your first time depositing USDC. Click the “Deposit” button on the “Pay with USDC” tab and click the “Approve” button on the pop-up window. Click “Sign” on the pop-up Metamask window and wait for the transaction to go through.
After the approval, you can deposit the desired amount of USDC into your Pre-deposit Balance. Click the “Deposit” button, enter the amount you’d like in the pop-up window, and click “Deposit”.
You can change the amount of USDC deposited into your Pre-deposit Balance. To deposit more, you can click the “Deposit” button and follow the instructions shown above. To reduce the amount, you can click the “Withdraw” button, enter the amount to withdraw, and click “Withdraw”
Lastly, you need to purchase the coverage. Click the “Adjust” button, enter the amount of coverage you want to purchase, and click the “Adjust” button. Follow the same instructions if you need adjust your insurance coverage for the next epoch
It is important to understand that your insurance coverage (or any further adjustments) will not become effective until the beginning of next epoch (or week). For the same reason, you will not be charged for the cover cost until the next epoch when your insurance plan becomes effective.
### Buy Cover with Native Token "FIS"
To purchase cover with FIS, simply switch to the “Pay with FIS” tab and then follow the same instructions as provided above. The amount of FIS deduction will be based on the weekly average price of FIS.
### 3. Use One Payment Account to Protect Multiple Accounts
Have multiple wallets all needs protection? NO PROBLEM, we made it simple for you.
In the “insured wallet” page, users can enter upto 10 other accounts to be protected under the same payment account.
During a payout, the damage amount of each account will be analyzed, and compensation will be distributed to each account according to its loss.
If the covered amount is less than the total damaged amount, compensation will be distributed to each account proportionally based on “its own loss / the total loss”.
### Additional Notes
\*\*Covered amount could be limited by the capacity of coverage available, and the overage cost is based on the actual covered amount. When the total purchase coverage amount is larger than the capacity, each individual’s coverage amount is reduced proportionately.
“Individual Actual Coverage” = “Individual Target Coverage” x (“Coverage capacity” / “Total Target Coverage”)
# What's Epoch
Epoch concept is implemented on Tidal's platform to re-balance reserves and purchased cover on a weekly basis. In simple words, at the beginning of every epoch | week, reserve pool size will be adjusted base on last week's deposit and withdraws, and the purchased cover cost will also be adjusted base on the new reserve level. (if the purchased cover amount is higher than reserve, the weekly cover cost will be automatically adjusted down to the cost of reserve amount).
**The adjustment happens every week at UTC 0:00 AM on Sunday**. \
*"Current epoch ending in xx days"* is displayed in the app on the top right corner on USDC reserve page.
Such design improves the platform operation in a few ways:
1. Provides cover buyer a pay-as-you go weekly subscription model.
2. No need to worry about paying more coverage than what could be covered (adjust to reserve level).
3. Allows reserve provider to withdraw funds on a weekly frenquency.
4. Lower the insolvency risks while allowing high leverage. (under a payout, reserves will be deducted and auto-rebalance happens right away next week).
Due to this design, pending period applies on epoch | week basis when user deposit or withdraw fund.
1. Provide USDC reserve: Become effective next week (if there is no valid claim)
2. Withdraw USDC reserve: Become effiective the week after next (if there is no valid claim)
3. Initialize/Select protocols to back up: Become effective next week (if there is no valid claim)
4. Update/Change selected protocols to back up: Become effiective the week after next (if there is no valid claim)
# FAQs
## What is Tidal Finance?
Tidal Finance is a project to establish a decentralized insurance marketplace in DeFi space to connect insurance sellers and buyers to cover smart contract hacks risk. Tidal offers the functionality to create custom insurance pools for one or more protocols. The main objective of the platform is to maximize capital efficiency and return to attract reserve providers, while offering competitive insurance premiums to attract buyers.
## **How does Tidal work?**
User can participate on tidal platform in the form of 4 roles:
* Reserve provider: Provide USDC as insurance collateral to earn premium.
* Cover buyer: Pay premium fee to get their TVL covered.
* Guarantor: Token holders of the protocols in the mutual cover pool can stake their token as collecteral to earn premium.
* TIDAL staker: Stake TIDAL token as collecteral to earn premium.
## **Why was Tidal built?**
As DeFi becomes mainstream, individuals and institutions need assurances that their investment of value into these new protocols are protected. As any new technology, smart contracts are susceptible to hacks and manipulations. In order to increase adoption of DeFi instruments, confidence in these protocols must be increased. Tidal solves this problem in a way that is economically attractive to users of DeFi protocols, transparent, profitable, decentralized, and scalable.
## **How is Tidal governed?**
The Tidal protocol is governed by its governance token holders. The public can submit changes to our code or parameters that guide performance of the protocol. Token holders can vote on these proposals in our normal DAO process using TIDAL tokens. At launch, all of the required parameters and selection of Assessors, etc. will be set by the Tidal team; however, all of this can be changed via the governing process.
## **What is stopping voters from fraudulently denying a valid claim?**
It is in the best interest of Tidal token holders to support the value of the Tidal tokens. The value of these tokens in turn is directly related to the overall health of the Tidal protocol. Our claim voting process will reward token holders that vote in the majority. Tidal Assessors can also overwire the vote unless the super majority has voted in favor of denying the claims.
## **Does Tidal require KYC?**
No, Tidal is non-custodial and doesn’t require KYC.
## **Why should reserve provider provides coverage?**
Tidal protocol is designed to help reserve providers to generate attractive returns while lowering the risk to their capital. Tidal functionality allows reserve providers to stake their capital to cover multiple protocols. At the same time, guarantor pool and staking pool is designed to compensate reserve providers when the loss insures.
Additional incentives to the reserve providers are provided in the form of TIDAL tokens.
## **Does Tidal or anyone else control my funds?**
No, you have full control over the capital staked to the protocol at any point of time. Nobody on the Tidal team has the ability to control your funds. There is a delay before you can withdraw your funds, to make sure any claim filed for the pool you are providing capital to can be covered.
# V1 Audit Report
### November 2021
{% file src="/files/in0PMK2XEpBs5PvSZWWw" %}
### October 2021
{% file src="/files/4divpiJa3qEjOZO8QFvt" %}
### September 2021
{% file src="/files/-Mkwgugsc8nTJ4OXkoc3" %}
Halborn September Token payment feature Audit
{% endfile %}
### August 2021
{% file src="/files/-Mk3cd1dlBfdlBDXIG5v" %}
Halborn Auguest Bug Fixes Commits
{% endfile %}
### June 2021
{% file src="/files/-Mdin59SvUtIigCWzD90" %}
Halborn Audit - June 2021
{% endfile %}
### June 2021
{% file src="/files/-McH19aKUS-Z1FWYvd0U" %}
Peckshield Audit - June 2021
{% endfile %}
### May 2021
{% file src="/files/-M\_ptH5djuKiuDu9knxD" %}
PeckShield Audit - May 2021
{% endfile %}
# ETH2.0 Slashing Coverage
This policy covers the ETH slashing loss occurred on StaFi protocol on Ethereum
## Policy Duration:
The policy's duration is expressed in weeks and begins at 0:00 UTC on the chosen start date (Sunday) and ends at 0:00 UTC on the chosen end date (Sunday).
## Payout condition:
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In the event of slashing losses, policyholders will receive compensation up to their maximum coverage amount. This covers most common slashing scenarios, where losses typically range from 0.01% to 3.3% of staked ETH.
However, in an extreme scenario where slashing losses exceed 3.3% of total staked ETH, there could potentially be insufficient collateral to fully compensate all policyholders. Though unlikely, this "collateral shortfall" situation could occur if an unusually large slashing event impacts the insurance pool.
If a collateral shortfall does materially emerge, any available insurance collateral will be distributed proportionally among policyholders based on their coverage amounts. Payouts would cover a portion of losses in this unlikely scenario, providing partial protection.
Rest assured, major slashing events resulting in losses above 3.3% have not occurred before, and diligent validator selection makes them improbable. But no insurance can eliminate all risks entirely. This policy aims to strike a practical balance between comprehensively covering foreseeable risks and maintaining sustainable, cost-efficient protection.
## Refund:
Additionally, policyholders are eligible for a return if the required collateral amount is less than the outstanding insurance amount. Such a scenario could be triggered by a large payout, for example. The unprotected amount will be automatically repaid to policyholders' wallets every week until adequate collateral deposits are made to cover the outstanding policies.
## Claim submission:
Claims can be submitted on-chain, and pool managers will be notified to conduct a payout.
# Swap Loss Coverage
This policy covers the Swap loss occurred on NativeX protocol
## **Policy Duration:**
The policy's duration is expressed in weeks and begins at 0:00 UTC on the chosen start date (Sunday) and ends at 0:00 UTC on the chosen end date (Sunday).
## Payout condition:
Policyholders will get compensation up to the maximum coverage amount in the event that assets are lost during the swap hosted by NativeX Protocol as a result of a smart contract exploit, depending on the actual loss caused by the vulnerability.
If the exploit damage is equal to or greater than 100% of the insured amount, 100% of the covered amount will be paid out. A lesser amount should be used when the exploit damage is less than 100% of the covered amount.
In the unusual but nonetheless probable event of a collateral shortfall (insufficient collateral to compensate policyholders), policyholders will receive collateral in proportion to their shares of the overall coverage amount.
A collateral shortage event may occur when multiple policies are activated at the same time and there is insufficient collateral to pay out the harmed policyholders from both protocols. It is a low-probability event, but it is difficult to eliminate such a risk in all insurance scenarios.
## Refund:
Additionally, policyholders are eligible for a return if the required collateral amount is less than the outstanding insurance amount. Such a scenario could be triggered by a large payout, for example. The unprotected amount will be automatically repaid to policyholders' wallets every week until adequate collateral deposits are made to cover the outstanding policies.
## Claim submission:
Claims can be submitted on-chain, and pool managers will be notified to conduct a payout.
# Logo images
{% file src="/files/2Pdm9Q0XakvXPwQlmGkJ" %}
