InsureX Risk Assessment

Total Fund Value (TFV): $300,000
Operational Reserve (OR): $100,000
Growth Mechanism: The TFV is projected to increase over time as a direct result of funds accumulated from the taxation on token transactions. This tax mechanism is designed to bolster the insurance fund, enhancing its robustness and ability to cover claims.

Available Fund for Payouts (AFP): Initially set at TFV - OR = $200,000, with an expectation of growth in line with the increase in TFV from tax revenues.

Rationale for Low Risk Classification:

Selection Criteria: Insurance is provided exclusively for smart contracts that have passed an extensive vetting process, ensuring they are trusted and foolproof. This critical measure significantly reduces the risk of claims by limiting coverage to contracts with a verified security record.
Expected Claim Frequency (ECF) for LR: The conservative estimate reflects the high standards of contract selection, anticipating a low incidence of claims due to the stringent security measures in place.
Expected Claim Severity (ECS) for LR: With a cap of $10,000 per claim, the model assumes that the severity of any potential claims will be manageable within the context of the fund's resources, especially as it grows.

Adaptive Payout Limits: While the maximum per claim payout is initially set at $10,000, this limit, along with the total monthly and annual payout limits, may be adjusted upwards as the TFV grows, ensuring that the fund's payout capacity scales with its size.

Dynamic Safety Margin: A portion of the TFV, beyond the operational reserve, is earmarked as a safety margin. This margin is designed to be flexible, allowing for adjustments in response to fund growth and the evolving risk landscape.
Semi-Annual Review: Regular reviews of the ECF, ECS, fund size, payout limits, and growth projections ensure the model remains responsive to both the actual performance and the anticipated expansion of the fund.

Last updated 1 year ago

Total Fund Value (TFV): $300,000
Operational Reserve (OR): $100,000
Growth Mechanism: The TFV is projected to increase over time as a direct result of funds accumulated from the taxation on token transactions. This tax mechanism is designed to bolster the insurance fund, enhancing its robustness and ability to cover claims.

Available Fund for Payouts (AFP): Initially set at TFV - OR = $200,000, with an expectation of growth in line with the increase in TFV from tax revenues.

Rationale for Low Risk Classification:

Selection Criteria: Insurance is provided exclusively for smart contracts that have passed an extensive vetting process, ensuring they are trusted and foolproof. This critical measure significantly reduces the risk of claims by limiting coverage to contracts with a verified security record.
Expected Claim Frequency (ECF) for LR: The conservative estimate reflects the high standards of contract selection, anticipating a low incidence of claims due to the stringent security measures in place.
Expected Claim Severity (ECS) for LR: With a cap of $10,000 per claim, the model assumes that the severity of any potential claims will be manageable within the context of the fund's resources, especially as it grows.

Adaptive Payout Limits: While the maximum per claim payout is initially set at $10,000, this limit, along with the total monthly and annual payout limits, may be adjusted upwards as the TFV grows, ensuring that the fund's payout capacity scales with its size.

Dynamic Safety Margin: A portion of the TFV, beyond the operational reserve, is earmarked as a safety margin. This margin is designed to be flexible, allowing for adjustments in response to fund growth and the evolving risk landscape.
Semi-Annual Review: Regular reviews of the ECF, ECS, fund size, payout limits, and growth projections ensure the model remains responsive to both the actual performance and the anticipated expansion of the fund.

Last updated 1 year ago