Buying coverage

Summary

• Any user can buy coverage on the platform (become Policy Holder) on any pre-existing Coverage pool on the platform.

• Policy durations are measured by weeks. All weeks are time-stamped - start and end on specific days in the calendar year, the pool's creation time-stamp being the origin. The minimum duration a user may buy Coverage for is 1 week, and the maximum period is 52 weeks.

  • In practice, the user can purchase a policy with an actual duration of less than 1 full calendar week if the purchase was made in the middle or at the end of the timed week.

• The Premium is determined by the duration of Coverage, the amount, and the current Utilization Ratio of the Project X Coverage Pool.

• There minimum yearly cost of Premium is 1.8%.

• The Premium cost displayed on the app is estimated. Its true value will be determined by how close the policy amount brings the Project X Coverage Pool's Utilization Ratio to 100%.

• 20% of Premium goes to the Reinsurance Pool, while the 80% is redistributed to the coverage providers as yield.

Types of coverage

Premium's cost chart

Based on the Utilization Ratio.

Where can I see the coverage pools available?

Head over to https://app.bridgemutual.io/user/cover

How much does the cover cost?

Three factors determine the price of cover. As each of the goes up, the price of the coverage (Premium) also goes up:

• The utilization ratio of the pool (the ratio between cover bought and cover provided, pools with a higher utilization ratio are considered riskier and thus more expensive to purchase cover from)

• The duration of the cover which you want to buy

• The amount of cover which you want to buy

For what duration can I buy cover?

The duration may be between a minimum of 1 week and a maximum of 52 weeks. This may be altered in later versions or may differ between different types of coverage products.

The actual duration of the cover is calculated in 1-week intervals, which start and end on specific days. In practice, a user can purchase a policy with a duration of less than one whole calendar week if the purchase was made in the middle or at the end of the time-stamped week.

Can I purchase multiple covers?

If they are from different pools - yes! However, you can only have 1 active cover per pool.

A Coverage Event occurred. How do I make a claim for the cover which I bought?

Making a claim

How exactly is the Premium calculated?

P_min - Minimum Premium (expressed in %) TP_max - Maximum Premium at the UR_risky threshold (expressed in %) UR_risky - Utilization Ratio for pricing model when the asset is considered risky (expressed in %) P_max - Maximum Premium when the utilization ratio equals 100% (expressed in %) UR - Utilization ratio (expressed in %) %P - % Premium in regards to the size of the Cover %P_final - final, % Premium in regards to the size of the Cover

$$UR=\frac {Capacity+Cover\:Size} {Liquidity}$$

$$if\:UR<{UR}_{risky} \implies \%P=\frac{UR}{UR_{risky}}*TP_{max}$$

$$if\:UR>{UR}_{risky} \implies \%P=TP_{max}+\frac{UR-UR_{risky}}{100\%-UR_{risky}}*(P_{max}-TP_{max})$$

$$\%P_{final}=max{\{\%P, P_{min}\}}$$

$$Annualized\:Premium\:Cost = Coverage\:Amount * \%P_{final}$$

Current protocol constants

P_min = 1.8% TP_max = 10% UR_risky = 85% P_max = 30%