Insurance Fund

Summary

Introduced with MIP-28┃Ratify the Parallel Insurance Fund the Insurance Fund is covering losses in case of shortfall events:

• Smart contract risk: Risk of a bug, design flaw or potential attack surfaces on the smart contract layer.

• Liquidation risk: Risk of failure of an asset that is being used as collateral on Parallel; risk of liquidators not capturing liquidation opportunities in a timely manner, or low market liquidity of the principal asset to be repaid.

• Oracle failure risk: Risk of the oracle system not properly updating the prices in case of extreme market downturn and network congestion; risk of the Oracle system not properly submitting prices, causing improper liquidations.

Rules

The DAO must decide, via governance votes, which deployment (PAR and/or paUSD) is covered, which chain is covered, or not, by the insurance fund, and at which % or $ value of the insurance fund the deployment & chain are covered.

Assets held in the insurance fund must be liquid under a 16 weeks period.

At least 10k PAR for PAR deployments and 10k paUSD for paUSD deployments must stay in the vaultsCore to cover very short term potential bad debts.

DAO Multisig signers will have the right to rebalance assets from the deployed insurance fund to vaultsCore contracts in order to always have enough assets to cover very short term bad debts.

The DAO approved to cover PAR & paUSD deployment on Ethereum and Polygon PoS to up to 100% of the insurance fund.

Insurance Fund Assets

Ethereum

Multisig	Address
Insurance Fund Multisig	0x6aF71a3723D3c0Ed69f84EE259c9De3019C2a77c
VaultsCore - PAR (only PAR in the contract)	0x68E88c802F146eAD2f99F3A91Fb880D1A2509672
VaultsCore - paUSD (only paUSD in the contract)	0x917b9D8E62739986EC182E0f988C7F938651aFD7

Polygon PoS

Multisig	Address
Insurance Fund Multisig	0x2C6A1D01057258281eFE31bB34Bc0Df24C13086e
VaultsCore - PAR (only PAR in the contract)	0x78C48A7d7Fc69735fDab448fe6068bbA44a920E6
VaultsCore - paUSD (only paUSD in the contract)	0xc0459Eff90be3dCd1aDA71E1E8BDB7619a16c1A4

Strategy Repartition

To mitigate the associated risks with holding native Parallel stablecoins (exploit that lead the PAR & paUSD prices to 0) the DAO has approved the diversification the insurance fund holdings in a way that both diversifies the fund and supports the growth of the Parallel protocol.

• 10k PAR → Ethereum VaultsCore contract

• 10k PAR → Polygon PoS VaultsCore contract

• 10k paUSD → Ethereum VaultsCore contract

• 10k paUSD → Polygon PoS VaultsCore contract

• 50k USD → PAR/EURA (Ethereum) → on Balancer (& staked on Aura)

• 50k USD ->paUSD/GYD (Ethereum) → on Balancer (& staked on Aura)

• 50k USD → PAR/EURe (Polygon PoS) → on Balancer (& staked on Aura)

• 50k USD → paUSD/stataUSDCn (Polygon PoS) → on Balancer (& staked on Aura)

• 214k USD (+ potential remaining PAR/paUSD accumulated in the meantime) → swapped for AURA, then locked in vlAURA for 16 weeks on Aura

AURA tokens will be acquired via CowSwap TWAP or OTC Deal, depending on the best offer received. Accumulated rewards from Aura & Balancer deposits would be swapped every 16 weeks for AURA tokens then locked as vlAURA for 16 weeks on Aura.