# Pricing Model The risk protection business is an endeavor to hedge against uncertain future losses, in which the covered person trades risk with RPPs through payments for cover products. Product pricing is at the heart of any risk protection business and Amulet builds its pricing model based on proven practices and historical data. The aim of product pricing is to find and charge a fair, affordable, and competitive price for users. It should reflect the risks undertaken by the protocol and be quick to adapt to fast-changing risk settings. Amulet's pricing models enable it to get a fair estimate on expected losses, reduce costs for users, and enhance the protocol's long term viability. Amulet's pricing models take a multi-faceted approach when determining risk. For example, its Smart Contract Cover uses audit reports, operational history, team info, etc. to generate a base rating for a protocol. The base rating, along with protocol APY and supply-demand factors, will be used to determine a cover product's price. Supply and demand is typically measured via a bonding curve between price and cover capacity. Basically the more capacity available, the lower the cover product's price and vice-versa. Stablecoin De-peg Cover rely on economic simulations of historical data to test and identify the initial limits of the cover product, followed by further refinement through the incorporation of data from current market indicators and forward-looking assumptions. Amulet will carefully select and define these limits at the start, then constantly refine the product as it receives new information. As more and more data becomes available, Amulet will be able to develop and fine tune increasingly sophisticated data-driven pricing models with the help of Machine Learning technology. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.amulet.org/documentation/product/cover-underwriting/pricing-model.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.