How it works
Policyholders with eligible collateral receive and accumulate, throughout the lock-in period, 6022 tokens that have been collected from 2% fees paid to the protocol by the insurer…
The collateral is secured by a lock and one or two keys are required to retrieve it. After the end of the lock-in period only one key is required. In this case, the policyholder who has recovered the collateral will also receive the accumulated fees. To open the vault and retrieve the collateral before the end of the lock-in period two keys are required. In this case, the insurer (the only one with two keys) recovers the collateral. In addition, when the vault is opened with two keys, the accumulated fees associated with the collateral are not redistributed to its policyholder, but to all (other) eligible policyholders in the insurance pool.
Step 1: Initialization of a 6022 Smart Contract by the Insurer
The insurer initiates the contract with the policyholder by creating a 6022 smart contract with these parameters:
– collateral cryptocurrency,
– expected amount,
– declarative value of the collateral in 6022 tokens,
– lock-in end date.
The insurer pays the fees to the protocol corresponding to 2% of the declaredcollateral amount in 6022 tokens and receives 3 NFT keys.
The insurer transfers one NFT key to the policyholder (this operation does not require the use of the 6022 protocol).
Step 2: Collateral Deposit by the Policyholder
The policyholder receives his NFT key and the insurer’s instructions to deposit his collateral. He deposits the exact requested amount in the specified crypto-currency.
His collateral is now locked by the protocol until the end of the lock-in period.
Step 3: Rewards distribution via the Reward Pool during lock-in period
Thanks to the reward pool, the policyholder receives rewards in 6022 tokens based on the insurer’s activity (new 6022 contracts created, 6022 rewards confiscated on other contracts). These reward tokens are capitalized on his 6022 contract in addition to his collateral. At the end of the lock-in period, the policyholder can freely dispose of these rewards. During the lock-in period, his rewards are locked along with the collateral.
Step 4_1 : Case where the Insurer decides to seize the Collateral
If the insurer uses their two NFT keys to seize the collateral, the insurer recovers the entirety of the collateral. The accumulated rewards are transferred to the reward pool and immediately redistributed to policyholders with an active 6022 contract (i.e., before the end of the lock-in period with deposited collateral)
Step 4_2 : Case where the collateral has not been seized before the end of the lock-in period
If the collateral has not been seized before the end of the lock-in period, the policyholder can use one key to retrieve the intact collateral and the accumulated 6022 token rewards
