Insurance Protected Vaults
We have all heard about it, have someone in our circle of acquaintances, or have been affected by an exploit or hack of a platform or a pool in the DeFi space.
This prompted us to think about the security of investors’ funds and the vulnerabilities in the financial instruments sector and to consider how to we could help to further protect investors that use these platforms against losses and security breaches in DeFi platforms, otherwise known as hacks or exploits. We came up with the idea of integrating an insurance fund into our protected vaults, thus protecting our investors on our platform by destining a fraction of the platform’s profits to an insurance fund that grows with time and might be able to totally cover any sort of event in the future.
On Friday, June 4th we released our Protected Vaults for Binance Smart Chain and Polygon Network. These vaults are smart contracts that use a specific set of strategies for simple yield farming. They use automation to continuously invest and reinvest deposited funds, which helps to achieve high levels of compound interest. On top of that, we use a share of the profits to build an insurance fund to protect our investors’ assets. We will explain how this mechanism is working later in this article.
Each vault can either refer to a pair of tokens invested in liquidity pools within the Binance Smart Chain ecosystem or a single token invested in lending or staking platforms. After investing their tokens, users receive tokens representing their share that can be redeemed at any moment in exchange for the underlying asset.
Anyone in the community can work together to build new strategies and vaults and host them themselves, or they can create a community vote to add them to the Polis Vaults platform.
Simply put, vaults can:
- Use any asset as liquidity.
- Provide one asset as collateral for another.
- Manage collateral at a safe level to mitigate default.
- Put any asset to work generating a yield.
- Reinvest earned profits.
All our vaults are protected by an insurance fund that comes from a 5% fee on the profits, which is then used to buy Polis and sent to a multi signature wallet in control of the team, that grows with time as locked value in the platform increases, which gives additional security to our users. Even if the platform was breached or compromised, the funds will be put to the disposal of vault users.
Insurance protected Vaults Reward Distribution
After profits are taken into account at the time of withdrawal, the insurance protected vaults will take up to 20% of the profits and distribute it as follows among Polis Drachma holders (stakers), the strategy developer, burned coins, insurance addresses and the charity.
We have provided a small selection of protected vaults to start with, this includes 9 single tokens and 5 currency pairs in the liquidity pool for the Binance Smart Chain as well as 5 single token vaults for Polygon Network. The range of vaults will be expanded in the coming weeks and a non-insured version of our vaults might be offered as well, increasing the user profit to 85%. And of course, there will be a Polis Maxi Vault within this month.
Insurance And Charity Funds
Funds for insurance and charity will be held in separate multi-signature addresses controlled by the developer team, and funds will only be released shall a hack happen either on the Polis Vaults service or any of the underlying investing strategies, or when a Community Proposal votes to assign resources to a charity organization.
Funds are stored in Polis, which means that the 5% insurance fee will be used to purchase Polis on PancakeSwap using the original asset.
The team will update the protocol so that funds meant for both insurance and charity are never in the hands of the developers of the vaults and the community is able to assign them through the governance. This is expected to arrive in Q4 2021.
All Vaults have a fee percentage assigned to the developer’s discretion, this allows to continue updating and optimizing investing strategies, as well as creating new ones. This fee also helps developers take care of the auto compound function, as there is a BNB cost to claim rewards for all users. Funds allocated to this address will be spent at the owner’s (developer team) discretion.
3% of Profits will be used to purchase Polis from Pancake Swap pools and burn them at 0xdeAD00000000000000000000000000000000dEAd. This will create additional buy pressure for Polis on a regular basis.
Polis Vaults are a great alternative to people that want to invest in DeFi services while reducing their risk exposure to potential losses allowed by vulnerabilities in the platforms’ smart contracts. The current selection of vaults ensures members from other tokens and protocols are able to benefit from our services and contribute to the thriving of the Polis Protocol by adding buy pressure in the form of the 3% burning fee.
Especially for Polis Holders, who are now able to benefit from DeFi services built on top of the Binance Smart Chain.
⚠ Polis Vaults' smart contracts are not audited yet. The underlying strategies use audited platforms, the team will publish the audit results once they arrive. Use at your own risk.⚠
Binance Smart Chain Vaults: https://vaults.polispay.org/
Polygon Network Vaults: https://polygonvaults.polispay.org/