Insurance Fund

Coverage Protection

The coverage ratio is vault specific, as we currently only have one vault it is as follows:

(msY Backing Assets + Insurance Fund ÷ Total msY Issued) transparently measures the protocol's ability to honor redemptions for the msY vault:

• Coverage ≥100%: Full redemption value

• Coverage <100%: Proportional redemption

The Insurance Fund receives 10% of every yield distribution, creating a growing reserve designed to absorb temporary shortfalls during market disruptions or unexpected hedge performance issues. This fund maintains 1:1 redemptions during adverse conditions until exhausted, providing an important buffer against strategy volatility.

A 0.2% fee on mint and redeems sustains protocol operations while remaining competitive for arbitrage. Mint and redeem fees are zero until $100m TVL.