Claim Payout Structure

In order to build up PCR and minimize drawdowns on underwriters' capital, a tranche is built into Amulet's claim payout structure. This tranche is backed by future revenues and therefore dubbed as Yield Backed Claim ("YBC"). What this means is that Amulet is collateralizing revenues that it is expected to earn in the near future in order to mint more $aUWT for claim payouts so as to safeguard underwriters' capital against claims.

When a claim payout is approved, the necessary funds will be drawn from different payout tranches in the sequence outlined below:

1. Yield Backed Claim Pool.

2. Claims Reserve in the Treasury Pool.

3. Product Underwriting Pool (i.e., If there is a claim on Cover Product A, only the $aUWT staked in Cover Product A's underwriting pool will be affected).

This way, underwriting capital contributed by underwriters will be least affected. Underwriters can be confident that their principal is SAFU while generating considerable earnings through the various yield generation opportunities available on Amulet.

The time period which Amulet uses to determine the amount of revenue to collateralize for YBC will shrink progressively as Amulet builds up the PCR. Under no circumstances will the said time period's duration extend beyond its initial parameters.