Insurance Fund

Protects your assets and ensures platform stability

MET Vault can act as Insurance Fund

Insurance Fund, similar to the Drift protocol's insurance mechanism, is designed to protect against liquidations in the JUP Vault caused by market price fluctuations. By utilizing assets from the MET Vault, this fund acts as a financial buffer, maintaining platform stability during volatile market conditions. Participants in the MET Vault play a crucial role in this insurance mechanism, and in return for their contribution, they receive APY rewards. This approach offers both security and earning potential, ensuring a more resilient and stable platform for all users.

Risks

• Market Volatility: The insurance fund is exposed to the same market risks as the JUP Vault. Significant and rapid changes in asset prices could impact the fund's effectiveness.

• Smart Contract Vulnerabilities: Despite rigorous audits, smart contracts can have vulnerabilities that might be exploited, leading to potential losses.

• Systemic Risks: In extreme market conditions, the insurance fund might be insufficient to prevent liquidations, especially if multiple vaults are impacted simultaneously.

Requirements

• Participation in the MET Vault: Users must deposit assets into the MET Vault to contribute to the insurance fund.

• Understanding of Risk: Participants should be aware that while the insurance fund aims to mitigate risk, it cannot eliminate it entirely. Users should assess their risk tolerance before participating.

• Compliance with Platform Guidelines: All participants must adhere to WeaveLink’s terms of service and guidelines, ensuring the smooth operation of the insurance fund.

Ratings

JUP Farming

• Risk: 7/10 - The JUP Vault is exposed to market fluctuations which adds to the risk, especially during volatile periods.

• Reward: 9/10 - The potential for high APY, especially during favorable market conditions, offers strong rewards for participants.

• Flexibility: 5/10 - The vault provides some flexibility, but the 30-day JUP ASR unstaking requirement limits immediate liquidity and adaptability to sudden market changes.

Meteora Farming

• Risk: 3/10 - While there are risks like market volatility and impermanent loss, these are mitigated by WeaveLink's dynamic asset management.

• Reward: 8/10 - The potential for higher returns through maximized transaction fees makes it a rewarding option.

• Flexibility: 9/10 - The dynamic adjustment of liquidity positions offers significant flexibility, optimizing asset allocation based on market conditions.

Insurance Fund

• Risk: 5/10 - The insurance fund is designed to minimize risks, particularly by using a fund that is 5x the size of the vaults, reducing the likelihood of asset loss during market volatility.

• Reward: 7/10 - Participants in the MET Vault receive APY rewards, providing a decent return while contributing to the insurance mechanism.

• Flexibility: 7/10 - While effective in protecting assets, the fund has less flexibility compared to other strategies since it is focused on maintaining stability rather than dynamic market participation.

Triggers

Market Crash

• Scenario: A sudden and severe drop in the value of assets within the JUP Vault occurs due to a broader market crash.

• Action: The Insurance Fund is activated to cover potential liquidations, protecting user assets from forced sales.

Sharp Price Fluctuations

• Scenario: Significant volatility in the price of JUP tokens causes the collateral value in the JUP Vault to drop below the required threshold.

• Action: The Insurance Fund intervenes to prevent liquidation by providing additional collateral support.

Extended Unstaking Period Risks

• Scenario: During the 30-day unstaking period for JUP tokens, market conditions worsen, threatening the vault's stability.

• Action: The Insurance Fund is utilized to stabilize the vault and prevent user asset losses during the unstaking period.

High-Volatility Event in DeFi Ecosystem

• Scenario: A sudden DeFi market event (e.g., a protocol hack or regulatory change) leads to a rapid devaluation of assets in the JUP Vault.

• Action: The Insurance Fund provides the necessary liquidity to maintain vault stability and protect against mass liquidations.

Failure of External Protocols

• Scenario: An integrated Solana protocol experiences a failure or exploit, impacting the value of assets in the JUP Vault.

• Action: The Insurance Fund steps in to mitigate the risk of liquidation due to external protocol issues, ensuring user assets are safeguarded.

Warning:

The insurance fund is a key component in maintaining the stability and security of the platform, offering a valuable safeguard for users while also providing opportunities for rewards. However, participants should fully understand the associated risks and requirements before engaging.