Protocol Controlled Reserves
The Protocol-Controlled Reserves ("PCR") serve to protect the underwriters' capital when making claim payouts. Amulet believes this new model has the potential to scale sustainably.
Key Design Considerations
Minimize loss to underwriters' capital so as to continue to attract and maintain a large TVL as the foundation of the protocol.
Generate yield with a stable and growing TVL to develop the treasury pool.
Stake yields generated from the treasury pool into the underwriting pool to increase underwriting capital until it reaches critical mass for independent yield generation capabilities.
Have the growing treasury pool and protocol's yield generation capabilities back new underwriting tokens ($aUWT) as the first tranche for claim payouts, further minimizing potential losses to stakers.
Key Components of Protocol Controlled Reserves
Treasury Pool: Measures the cumulative value of Amulet's operations. This includes PoS staking rewards, borrowing, and lending revenue on Amulet's underwriting capital and cover payment sharing.
Yield Backed Claims Pool: Collateralization of future revenues that Amulet is projected to generate in order to mint more $aUWT for unexpected large claim payouts in order to reduce reliance on stakers' capital as far as possible.
With a solid PCR base as the foundation, Amulet can deploy assets in a number of ways. The primary function of PCR will be to underwrite protocol and individual user risks. However, so that the capital does not remain idle, PCR will be invested with returns accruing to $AMT holders and $SOL stakers.
Eventually, Amulet will be able to continuously grow its TVL with minimized potential loss to the staked capital, build up a large treasury pool, create stable returns for users and capture value for token holders. This approach has the potential to build Amulet into a multi-billion dollar protocol in the medium-term, scaling with DeFi’s growth prospects over the long-term.
Treasury Pool
The Treasury Pool is a key element of PCR. Income expected to expand the Treasury Pool's size includes:
A portion of PoS staking rewards generated by staked $SOL.
A portion of cover payments earned from cover sales.
A portion of investment returns generated from staked assets, such as $mSOL, $stSOL, and $aUWT.
Other revenue and fees generated by Amulet (e.g. LP rewards, CAP rewards).
The Treasury Pool will be earmarked in the following manner:
Claims Reserve: x% reserved for large claims and to grow core funds through reinvestment in the underwriting pool.
Value Accrual Activities: y% to purchase and redistribute $AMT tokens to long-term $AMT holders ($AMT buybacks and redistribution will be limited at first and eventually increased as Amulet builds up to a critical mass of funds or reserves).
Development Costs: z% to fund development.
Example: x% / y% / z% may initially be set as 90% / 10% / 0% and subjected later to future governance decisions.
Last updated