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Velocity ProtocolInsurance FundInsurance Fund Staking

Insurance Fund Staking

Overview

Users that elect to stake into the Insurance Fund will be collateralising the Insurance Fund.

The Insurance Fund is the protocol’s first backstop to maintaining the solvency of the protocol. All users that stake into the IF should read through and be clear on what happens to the Insurance Fund when levered losses and AMM deficits occur (Insurance Fund).

Reward

For providing liquidity to the Insurance Fund, Insurance Fund Stakers are rewarded with their proportionate share of the Revenue Pool every hour.

The Revenue Pool is funded by various aspects of the protocol:

  1. borrow fees;
  2. spot market exchange fees;
  3. perpetual market exchange fees; and
  4. liquidation fees.

An Insurance Fund Staker’s proportionate share is calculated by: Total Staked Amount / Total Insurance Fund

The Insurance Fund is 100% staker-owned on Velocity — there is no protocol-owned share of the fund. Each revenue settlement (by default, at most once per hour per market) accrues entirely to Insurance Fund Stakers as share-price appreciation; the legacy protocol/staker split (and the instructions to withdraw or rebalance a protocol-owned portion) do not exist.

Example:

The Insurance Fund is at $5000 USDC. You decide to stake $10,000 USDC, bringing the total to $15,000 USDC. Your proportionate share of the fund is 10000/15000 = 66.6%.

Each hour, as the revenue pool settles fees earned to the Insurance Fund, let’s say $30 is settled — all $30 accrues to stakers as share-price appreciation, none to the protocol. You will receive 66.6% of that value ($20) and the remaining Insurance Fund stakers would receive 33.3% ($10).

All rewards earned accumulate and compound the account’s insurance amount staked.

A portion of each spot market’s deposit-interest gains (the market’s ifFeeFactor) is also carved out directly to that market’s Insurance Fund, on top of revenue-pool settlements — see What is the Insurance Fund?.

Cooldown Period

There is a cooldown period of 13 days for unstaking any collateral from the Insurance Fund.

A user first requests to unstake a specific amount (denominated in shares). During the cooldown period, the staked amount does not receive rewards. After the elapsed period, the user can fully unstake.

Note: You cannot unstake while the spot market utilization (or 1hr utilization twap) is above 80%. This does not affect opening/timing on unstake requests.

How to stake to Insurance Fund Vault

  1. Select the vault and click Stake
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  1. In the modal, enter the amount you’d like to stake
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  1. Click Confirm Stake

How to unstake from Insurance Fund Vault

Funds will be available to withdraw 13 days after making an unstake request.

You can only have one pending unstake request per vault at a time. You can cancel a request at any time, noting your 13 day cool down period will restart upon any new unstake request.

You can unstake from the Insurance Fund page:

  1. Click Unstake
health-modal
  1. Select the amount you’d like to unstake and click Request Unstake
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What is the Insurance Fund?Rewards