📌De-pegging
The Bridge Mutual DAO (BMI token holders) vote on whether claims are valid. As such, all payouts are discretionary as per the will of the DAO members. DAO members are financially incentivized to make decisions in accordance with the terms defined below; to learn more on how voting works, read the Claim Voting Process page. If DAO members deviate from the terms below, the reputation of the protocol is at risk, and the value of their tokens (needed to vote) will likely decrease as a result. The more tokens a user has, the more voting power they have, and the more they stand to lose if a vote is inappropriately handled.
Definitions:
De-pegging Event - an event that meets all of the criteria defined in the section “What Is Covered?” below.
Cover Period - The duration of a policy, set by the policy purchaser. Coverage begins the moment the policy is purchased on the protocol.
Covered Amount - means the amount of cover purchased by the Policy Holder.
Permanent Loss - Any loss of value that is, or will likely be, permanent. In the case of de-pegging, this is true if an asset loses its peg and it seems unlikely that the peg can or will be restored.
Policy Holder - The owner of the address that purchased an active policy.
DAO - A decentralized autonomous organization. In Bridge Mutual’s DAO, token holders can stake their BMI in the protocol to receive vBMI, which is used as a measurement of your voting power within the DAO.
Pegged Asset - A digital asset designed to hold a stable price relative to another asset. Pegged Assets are typically pegged to the U.S. dollar, but there are other types of Pegged Assets, such as those pegged to the Euro, the British Pound, Ethereum (stETH), Bitcoin (wBTC) and more. Some examples: USDT, USDC, DAI, stETH, MIM, and many more.
Threshold - The point of deviation between the value of the Pegged Asset and its target asset where the policy becomes eligible for a claim and may be compensated; the ratio is 0.94 : 1 or a 6% deviation.
De-pegging Event - Any event that causes a pegged asset to fall to or beneath the Threshold.
Major Exchanges - A centralized or decentralized exchange that is prominent in the crypto industry and tends to have high trading volume, including but not limited to Binance, FTX, Huobi, Kucoin, MEXC, Bitfinex, Gate, Uniswap, Sushiswap, Pancakeswap, and many others.
What is Covered?
De-pegging coverage is intended to reimburse a user for any loss in the value of their Pegged Assets should they de-peg, for any reason, from the price of its target asset.
Example: If the price of USDC falls to $0.37 from $1.00, Policy Holders of USDC coverage would be eligible to receive $0.63 for every $1.00 of coverage they purchased, so long as they sold USDC at this de-pegged price. The reason the Policy Holder would not receive $1.00 for every $1.00 of coverage they purchased is because the Policy Holder can still sell USDC for $0.37 each. Bridge Mutual DAO members agree to approve a claim if:
During the Cover Period,
I. The Pegged Asset's price fell to or below the Threshold price, and
II. The Policy Holder sold some or all of the Pegged Asset at or below the Threshold price, and
III. The Policy Holder suffered a Permanent Loss due to this sale, and
IV. It is impossible, or seems unlikely, for the Policy Holder to be made whole by a third party, and
V. The Permanent Loss is incurred by the same wallet address that purchased the policy, or the Permanent Loss was incurred by a different wallet address, but there is clear and convincing evidence that strongly suggests that the Policy Holder is the same owner of the wallet address that incurred the Permanent Loss. [The intent of this clause is to ensure that Policy Holders are not selling or splitting the payouts of their policies to undeserving third parties.]
In the event that some Pegged Assets are sold both at/below and above the Threshold price, the protocol will only take into consideration the sale of the Pegged Assets that were sold at or below the Threshold Price, and ignore the sales that took place above the Threshold Price. [For example: If the Threshold price on a de-pegging policy for USDC is $0.94, and the Policy Holder sells 100 USDC for $0.96 cents and 100 USDC for $0.70 cents, the protocol will ignore the sale of 100 USDC at $0.96 entirely. In this example, it is likely that the Policy Holder will receive a reimbursement of $30 in value for the sale of 100 USDC at $0.70 cents.
It is irrelevant for how long a Pegged Asset falls below the Threshold; there is no time or duration requirement for a valid De-pegging claim, a claim can be valid as long as the above elements are met.
What is acceptable evidence?
I. Links to Major Exchanges showing evidence of a De-pegging Event.
II. An etherscan link (or link to any other appropriate chain explorer, for example BSCscan and SOLscan) showing the transaction of the Policy Holder selling the Pegged Asset for a Permanent Loss. If no link is provided, the assumption will be that the Policy Holder's address is the same address that suffered the loss, and the DAO will check this wallet address for evidence.
III. Anything that helps prove there was a Coverable Event.
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