Guarantee? We don’t need no stinkin’ guarantee!

2 min readApr 5, 2022

Buying insurance is a simple process: choose a policy and pay the premiums. What if the policies suck? What if the policies cover too little or too much? What if the policies cover things you don’t need?

Nexus Mutual offers excellent Yield protection, “If your yield bearing token de-pegs in value by more than 10%, claim up to 90% of your loss…” this screenshot shows 4 of their 11 options:

So each year it costs you some percent of your assets to cover the whole, in 30 day, 90 day, and 1 year increments; Right on. That’s one approach.

In contrast, to buy a week of cover, Pharo Testnet asks:

  1. “In how many hours will SHIB fall by 5%?”
  2. How much cover do you need?

Which do you prefer? Is either one better? What are the tradeoffs?

Nexus uses Actuaries, whose high costs are rolled into their “Yearly cost”.

Pharo’s Wisdom of Crowds could double your cover for a perfect prediction.

Actuaries allow Nexus to guarantee your expensive position is filled.

Wisdom of Crowds allows Pharo to price any required cover.

So which do you prefer? A guaranteed poor fit, or a market driven precise fit?

Pharo’s Anubis market algorithm matches “Buy Cover” positions with “Liquidity Provider” positions. A buyer may want a lot of cover fast, and a providers may not want to assume that risk. If you come early to the game with a reasonable position, it’ll likely be filled. If you’re late to the market, there’s no guarantee… Do you need a stinkin’ guarantee?!?