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LIP-11: Update Risk Parameters for Stablecoin Coverage

Active
Proposer: InsureBuddy (0x1234...5678)
Created: May 24, 2025
Votes: 287
Voting ends: 2 days 6 hours
For75%
Against25%

Voting in Progress

This proposal requires a 60% quorum to pass. Current participation: 100%

Proposal Details

Background

The current risk parameters for stablecoin de-peg coverage were established in January 2023 when the market conditions were different. Since then, we've observed changes in stablecoin market dynamics and risk profiles that necessitate an update to our coverage parameters.

Proposal

This proposal recommends the following changes to the stablecoin de-peg coverage risk parameters:

  • Update the de-peg threshold from 0.95 USD to 0.97 USD for major stablecoins (USDC, USDT, DAI)
  • Increase the maximum coverage amount from 5M USD to 7.5M USD per user
  • Adjust the premium calculation formula to account for historical volatility

    • Rationale

    These changes will:

  • Better protect users against minor de-pegging events that can still cause significant losses
  • Allow for higher coverage limits to meet increasing demand
  • Create a more accurate pricing model that reflects actual risk

    • Implementation

    If approved, the changes will be implemented within 48 hours after the voting period ends. The implementation will require an update to the core insurance contract and the risk assessment module.

    View on Etherscan

    Discussion (3)

    C
    CryptoInsurer
    0xabcd...1234
    May 24, 2025

    I support this proposal as it provides better protection for users against stablecoin de-pegging events. The increased threshold makes sense given recent market volatility.

    I
    InsureBuddyProposer
    0x1234...5678
    May 25, 2025

    Thanks for the support. The changes are designed to make our coverage more robust and competitive in the current market environment.

    R
    RiskAnalyst
    0x9876...5432
    May 25, 2025

    While I understand the rationale, I'm concerned about the potential impact on premiums. Has there been any modeling done to estimate how much this will increase costs for users?

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