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COVER Protocol (COVER)
A Risk Coverage Marketplace for Ethereum Smart Contracts.
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COVER Protocol is a decentralized risk coverage marketplace for Ethereum smart contracts, allowing for peer-to-peer coverage with the costs of protection priced entirely by the market.
COVER is the native ERC-20 governance token of COVER Protocol and is used for the following:
Governance: COVER token holders can vote on community-submitted proposals that will shape the future of the protocol;
Shield Mining: users can earn COVER tokens by providing liquidity to the COVER Protocol;
Claim Management: holders can use COVER tokens to validate/invalidate claims in the claims management process.
Fungible cover tokens are created when a liquidity provider deposits collateral into a Cover smart contract. Each Cover smart contract specifies the protocol to be covered, the preferred collateral, the amount to deposit, and the expiration date of coverage.
The fungible cover tokens are maintained on a 1:1 basis with their collateral. For each unit of collateral (for instance, 1 DAI) deposited, the liquidity provider receives 2 tokens: a CLAIM token and a NOCLAIM token, which can be sold to Coverage Seekers or Coverage Providers. The CLAIM token represents a right to receive the deposited collateral when there is a security incident to be covered by the Cover smart contract during the designated coverage period. The NOCLAIM token represents rights to receive the deposited collateral when there is no security incident to be covered by the Cover smart contract during the designated coverage period.
There are three types of participants in the COVER Protocol:
Market Makers hold both CLAIM and NOCLAIM tokens and to provide liquidity.
Coverage Seekers hold CLAIM tokens to cover the exposure to the protected product.
Coverage Providers hold NOCLAIM tokens to get rewarded when no security incident takes place.