FAQ - Liquidity Providers

This section provides answers to frequently asked questions from Liquidity Providers.

How will Ensuro manage crypto volatility?

Ensuro is not affected by crypto volatility because it operates entirely using stablecoins. We use cryptography and blockchain as technologies, but we don't use volatile cryptocurrencies such as BTC or ETH.

Where are my deposited funds stored?

Your funds are allocated within Ensuro's smart contracts. The code of the smart contracts is public, open source and audited by third party auditors (Quantstamp). Your funds are visible at any time either from the Ensuro front end or from Polygon scan.

What are the KYC requirements?

In order to proceed with KYC, make sure to have the following information:

A clear picture of yourself. Make sure to have all the parts of your face visible, and do not wear masks or sunglasses.

Your ID card or a picture of it ready. Depending on the country of origin you might be required to provide a certain type of ID. Typically passports are accepted for all the countries. Make sure to take a clear picture of the document and ensure all the information is clearly visible.

We cannot accept individuals who have a passport from a sanctioned country. For more information, read our Terms of Service.

I have locked my cryptocurrency in an Ensuro pool. Now what?

You are now providing capacity for insurance or protection products and now you are part of the web 3 revolution ! In order to accumulate interest, there is nothing more that is needed to be done on your end. For each policy sold by our risk partners, an incremental amount of capital (the Solvency Capital Requirement) is locked. The SCR earns an interest rate that is set for each pool, and on top of that, depending on the product, you may be earning additional interest from the Asset Manager returns.

Is Ensuro rated?

Ensuro Re Limited, the reinsurance company domiciled and licensed in Bermuda, is not currently rated by any of the major agencies.

Is Ensuro restricted only to stablecoins?

Currently, only USDC are accepted by the Ensuro protocol, however our architecture has the functionality to accept and operate using other cryptocurrencies.

How much can I earn by providing liquidity to Ensuro?

Returns for the protocol LPs depend on products performance and pools utilization rate. So far, the protocol generated an APY of around 16% for its investors.

How much do I have to wait to withdraw my money?

You can immediately withdraw any portion of the capital that is not utilized. If the utilization rate is close to 100%, a withdrawal will have to wait until a sufficient number of policies have expired and the utilization rate is returned to an acceptable level. Different products might have different duration so please check carefully the product description before investing.

There's a minimum amount I have to invest?

No, there is no minimum amount required to participate in the Ensuro Liquidity pools.

Is there a minimum period of time during which I have to deposit my money in order to obtain returns?

There is no minimum amount of time during which you have to deposit your funds in order to obtain returns? The yield accrues continuously.

Can I invest with volatile cryptos such as ETH or MATIC or just USDC?

At the moment only USDC (Polygon) is accepted in the pool. This might change in the future once we decide to onboard different types of risk that might require a native token to be covered.

Why do we observe a negative premium balance when the volume of a product increases?

When the sales volume of a product increases, we commonly observe a negative or decreasing premium balance. Over the sample of expired policies, losses seem higher than expected, and the premiums collected appear insufficient to sustain the product. While this dynamic might worry some, it is artificial, and its origin lies in the timing of the protocol's cash flow.

To illustrate this point, let's take an example. Imagine an insurance company that sells policies that last for two days and have a payout of $10. The company's actuarial team estimates that policyholders claim them in 50% of the cases, and if the policy is triggered, it is always triggered the day after it is solved. The company decides to sell these policies for $6, which results in a profit of $1 for each policy sold.

Initially, the insurance company sells two policies, and none expires. On the second day, the company sells four more policies, and one of the policies sold on the first day is triggered, resulting in a payout of $10. The premium balance at this point is -10$. On the third day, six policies are sold, and two of the policies sold on the second day are triggered, resulting in a payout of $20. The premium balance at this point is -24$. This dynamic has been consistently observed in the actual results of our program.

This example unravels a dynamic that holds in real scenarios: "bad" policies always expire earlier than "good" ones. When volumes increase, more "bad" policies expire, impacting the premium balance. However, as the volume stabilizes over the long term, the premium balance will return to a positive level. Therefore, the negative premium balance observed when the volume of a product increases is only temporary, and it is artificial, caused by the timing of the protocol's cash flow.