Cover Protocol V2 Mainnet & BSC Dual Launch

3 min readMay 11, 2021

Hope you all enjoyed the Ropsten testing and were able to get used to how Cover V2 works. Tomorrow, May 11th afternoon EST timeline, we will be launching Cover V2 on the ETH and BSC mainnet.

Note: If gas prices remain at these elevated levels we may scale down the scope of the mainnet launch until gas prices drop with 1 pool deployed.

Cover Pools

Four pools will be launched on ETH Mainnet.

1 Ruler CDS pools for selected Ruler Pairs
1 BoringDAO pool for its products
1 YearnV2 pool for some of its larger vaults
1 stablecoin pool for popular stablecoins

One pool will be launched on BSC Mainnet with coverage expiration on May 31st.

Read our claims guidelines here to understand what is Covered. All pools will be launched with Dai as the collateral/payout.

For the YearnV2 pool, the coverage will be expanded to the underlying projects the strategy invests in. For example, if the DAI vault is invested in Curve, and Curve gets hacked and causes loss on the Dai vault, you will be covered.

Rewards for Cover V2

There will be airdrop rewards for liquidity providers of certain Cover Pools via partner incentives. The rewards will be based on the amount of liquidity a user provides in the orderbook scaled by how far away from the market price the order is and weighted by time the order is open.

The rewards will be claimable on the order books app when they are ready (will be announced with user guide).

How to Make a Return As a Provider

As a provide, you make a return by

Mint covTokens with Dai
Selling cTokens on the order books.
You only pay gas to mint the coverage and redeem your initial DAI back at expiration. The buyer of coverage pays the gas fee on the sale.

YearnV2 Example:

Let’s say you have 100k Dai, and want to invest it. You are pretty confident in Yearn’s smart contract(s). You would do the following:

Mint 100k Dai worth of covTokens that expires by the end of July. In return, you would receive 100K of each cToken, one ncToken and one FUTURE cToken
Keep the ncToken and FUTURE cToken (Read here to understand what those tokens are).
Sell the 7 different cTokens you minted (you have 100k of each).
a. Sell each cToken for 3 cents
b. You will get an upfront premium of $21,000.
c. If Yearn is not exploited before expiry…that is an 84% annual return.

Appendix — Cover Pools Details

RulerCDS1

Expiry: 2021_5_31
Risks for the pool:

WBTC lending
WETH lending
WETHDegen lending
xRULER lending
xRULERDegen lending
xCOVER lending

BoringDAO

Expiry: 2021_7_31
Risks for the pool: TBD

YearnV2

Expiry: 2021_7_31
Risks for the pool:

WETH Vault
ETH Vault
YFI Vault
WBTC Vault
DAI Vault
USDC Vault
USDT Vault

For the YearnV2 pool, the coverage will be expanded to the underlying strategy projects. For example, if the DAI vault is invested in Curve, and Curve gets hacked and causes loss on the Dai vault, you will be covered.

Stables