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EasyFi to enter into a strategic partnership with Tidal, a Polkadot-based DeFi insurance platform, to offer up to 5 million USDC coverage to EasyFi's protocol and users in the event of a failure or hack. Tidal's insurance protection is another way EasyFi is lowering the risk for its protocol and its users on different networks, including Polygon, BSC, and Ethereum.
Tidal is a cross-chain discretionary mutual cover protocol that offers DeFi teams the ability to hedge against their protocol or project failure. The project employs multi-faceted functionalities that increase the security of protocols and guarantors while covering buyers. Partnering with Tidal will allow EasyFi to provide certain loss recovery to its user in the event of a hack or failure.
As part of their plan, Tidal is planning to bootstrap a 5 million USDC reserve pool in a phase 1 launch that is expected to go live in June. This pool could offer EasyFi up to 5 million USDC available coverage. Tidal has plans to increase the size of the reserve pool after a few weeks.
As per the possible integration, Tidal will include EasyFi protocol into its mutual cover ecosystem, using which cover providers can deposit their capital to provide insurance for EasyFi products. This partnership also opens up opportunities for EasyFi users to purchase cover by paying the required insurance premiums. Here is some information on the cover:
Cover Amount. The cover amount is anywhere between 5% to 10%, based on the reserve supply and cover sold. For example, to cover a 5 million amount, it will cost buyers about 30k/month (at the rate of 7%). Moreover, this cover amount will be sold to EasyFi protocol to give an edge to EasyFi users over other retail buyers that are speculating a hack. This cover amount will be paid to EasyFi in case of a hack.
Cover Period. The Tidal team has plans to use a subscription-based model of cover period, which should be every week. The goal is to mitigate the risk of insolvency. For example, Tidal could reduce the Reserve Pool due to any hack or hacking attempt on the protocols and reduce the available cover amount temporarily.
Cover Term. The cover will also include any losses caused by the non-direct protocol hacks in EasyFi's strategy. The projects in context are Compound, Curve, Aave.
There is A Whole Lot of Benefits for EasyFi Users
In addition to providing insurance cover against EasyFi products, Tidal will also reward buyers in the form of USDC or TIDAL tokens. This initiative will help bring the cover cost down to 2% (8.6k/month instead of 30k/month). The reward period is set for three months as of now and could be extended later.
Furthermore, Tidal will create a Guarantor Pool for EasyFi by taking EZ as a deposit asset, although there is no limit on the number of EZ tokens a buyer can deposit. The Tidal team will reward 5% of the cover buyer's payment to this pool as well as a share of TIDAL token rewards (amount to be decided at launch). If a hack occurs on EasyFi and a cover buyer raises a claim, Tidal will distribute up to 30% of the funds from the Guarantor Pool to compensate for the lost amount. The aim is to attract more users and encourage cover providers to provide liquidity for the EasyFi protocol.
What This Insurance Cover Means for EasyFi
Additionally, Tidal could bring the following value proposition to EasyFi and its huge user-base:
Attract more users by increasing the safety of EasyFi through Tidal's insurance.
Expand its reach through collaboration with different marketing channels of Tidal.
Offer EZ Token holders an opportunity to earn more on their holdings by buying covers and get rewards in TIDAL tokens.
The recent security incident has taught the EasyFi team that it is operating in a financial market and that malicious actors are always looking for ways to exploit the whole crypto ecosystem. The decentralized platform intends to secure its users from any possible hack that may or may not happen in the near future. Partnering with Tidal — the industry's best insurance provider - will provide EasyFi the ability to hedge against any failures.
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