Purchase a Policy
The protocol automatically determines the premium or policy fees by taking numerous aspects such as policy term/cover duration, adverse selection, sum insured, utilization ratio, total pool balance, reassurance pool, etc into account.
The policy fee is determined by the supply and demand in the cover market. A pool with a low utilization ratio charges much less than one with a high utilization ratio. A pool with a high utilization ratio costs higher fees, which makes it more enticing and lucrative for liquidity providers to contribute more cash, lowering the price gradually.
Equation:
The policy fee denoted
is given by the equation
where the value of x is always between constants
and
,
is the cover commitment amount,
is the total balance of the pool,
is the policy duration desired,
is the desired cover amount,
is incident support pool amount for the cover pool ,
is incident support pool capitalization ratio.
For simplicity, this equation can also be written as:
Check the following page to calculate cover fees:
import { ChainId, policy, registry, utils } from '@neptunemutual/sdk'
import { info } from '../configs/info.js'
import { getProvider } from '../provider.js'
import { weiAsPercent, parseUnits, unitsAsDollars, formatPercent, toFraction } from '../bn.js'
const get = async () => {
try {
const { key: coverKey } = info
const productKey = utils.keyUtil.toBytes32('')
const provider = getProvider()
const dai = await registry.Stablecoin.getInstance(ChainId.Mumbai, provider)
const daiDecimals = await dai.decimals()
const args = {
duration: 2,
amount: parseUnits(500, daiDecimals)
}
console.info('Getting %s cover for %d months', unitsAsDollars(args.amount, daiDecimals), args.duration)
console.info('--------------------------------------')
const response = await policy.getCoverFee(ChainId.Mumbai, coverKey, productKey, args, provider)
const {
fee,
utilizationRatio,
totalAvailableLiquidity,
rate
} = response.result
console.info('Rate: %s', formatPercent(toFraction(rate.toString())))
console.info('Fee: %s', unitsAsDollars(fee, daiDecimals))
console.info('--------------------------------------')
console.info('Utilization Ratio: %s', weiAsPercent(utilizationRatio))
console.info('Total Available Liquidity: %s', unitsAsDollars(totalAvailableLiquidity, daiDecimals))
// console.info('Cover Ratio: %s', weiAsPercent(coverRatio))
} catch (error) {
console.error(error)
console.info('Try adding more liquidity --> `3.\\ add-liquidity.js`')
}
}
get()
/*****************************************************************************
[info] Getting US$500.00 cover for 1 months
[info] --------------------------------------
[info] Rate: 8.00%
[info] Fee: US$3.07
[info] --------------------------------------
[info] Utilization Ratio: 0.00%
[info] Total Available Liquidity: US$4,076,840.42
*****************************************************************************/
Result Type
Property | Type | Description |
fee | number | The amount required in DAI to purchase the policy for the specified amount. |
utilizationRatio | number | Utilization Ratio = Total Commitment / Total Liquidity |
totalAvailableLiquidity | number | Total Available Liquidity = Total Liquidity - Total Commitment + Amount in NPM Provision + Weighted Amount in Assurance Pool |
floor | number | The base policy floor rate |
ceiling | number | The base policy ceiling rate |
rate | number | The annualized percentage required to purchase this policy for the specified amount |
import { ChainId, policy, registry, utils } from '@neptunemutual/sdk'
import { info } from '../configs/info.js'
import { getProvider } from '../provider.js'
import { parseUnits } from '../bn.js'
const purcahse = async () => {
try {
const { key } = info
const provider = getProvider()
const dai = await registry.Stablecoin.getInstance(ChainId.Mumbai, provider)
const daiDecimals = await dai.decimals()
const args = {
duration: 2,
amount: parseUnits(200, daiDecimals), // <-- Amount to Cover (In DAI)
referralCode: utils.keyUtil.toBytes32(''),
onBehalfOf: provider.address
}
// First approve the Policy contract to spend your DAI or BUSD
let response = await policy.approve(ChainId.Mumbai, { }, provider)
await response.result.wait()
response = await policy.purchaseCover(ChainId.Mumbai, key, utils.keyUtil.toBytes32(''), args, provider)
await response.result.wait()
console.info(response)
} catch (error) {
console.error(error)
}
}
purcahse()
/*****************************************************************************
[info] {
status: 'Success',
result: {
type: 2,
chainId: 80001,
nonce: 16,
maxPriorityFeePerGas: BigNumber { _hex: '0x0fa4b452d0', _isBigNumber: true },
maxFeePerGas: BigNumber { _hex: '0x0fa4b452d0', _isBigNumber: true },
gasPrice: null,
gasLimit: BigNumber { _hex: '0x09c943', _isBigNumber: true },
to: '0x23099F06e9ABbeE01597F422CDBb9c232D581626',
value: BigNumber { _hex: '0x00', _isBigNumber: true },
data: '0x82bdf3bd0000000000000000000000002dac3776b9f4243df6445515ebe6f6cd003b3681616e696d617465642d6272616e6473000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000002000000000000000000000000000000000000000000000000000000000bebc2000000000000000000000000000000000000000000000000000000000000000000',
accessList: [],
hash: '0x0402cec1b8fce955bca22c83e1fea5d2c74d711f1ea7fb111c35cce9082e2692',
v: 0,
r: '0x81f18c2a43f4f509d4ef3aeebc3f28143910292b53ecced7625256a86b746b87',
s: '0x04d826825bf61048523b22289c1795eb92353414ed9c8a35acd820740d172b17',
from: '0x2DAc3776B9f4243DF6445515eBE6F6Cd003B3681',
confirmations: 0,
wait: [Function (anonymous)]
}
}
*****************************************************************************/
Last modified 4mo ago