Cover Types
You may have seen the phrase guaranteed payout in our documentation, website, blog, videos, and other materials.
It is critical that you grasp the distinctions between "dedicated" and "diversified" cover pools. Due to its complexity, we first planned to build "diversified pool" as the primary feature of version 2. However, we rolled up our sleeves and completed the "v2" feature in its entirety as part of the "v1" release.
Please keep in mind that the guaranteed payout only applies to dedicated cover pools. In order to cover a single dApp, a dedicated cover pool is created as a standalone product. It has no capital efficiency, leverage, or support for child products. Diversified cover pools, as opposed to specialized cover pools, may support and collectively cover a variety of "products" with extra leverage and capital efficiency.
Below are some important distinctions and similarities between "dedicated" and "diversified" cover pools:
Topic
Dedicated
Diversified
Protection Model
Parametric
Parametric
Triggered By
Incident Reporting
Incident Reporting
Product Model
Standalone
Multiple products
Child Covers
Not supported
Supported
Leverage Factor
No
Yes
Capital Efficiency
No
Yes
Premium Cost
Higher
Lower
Payout Model
Full payout
First come first serve, up to the maximum balance available in the pool
Payout Guarantee*
Yes
No
Policy Purchase From
Cover pool
Product pool
Liquidity Allocation
Single pool
Multiple products
Resolution Achieved Via
Staking
Staking
Personally Identifiable Info
Not collected
Not collected
Proof of Loss
Not required
Not required
* the guaranteed payment is predicated on the Neptune Mutual protocol not being hacked.
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