Umbrella Protocol

From their Litepaper (5-1-2021):

“Featuring NFT tokenized protection, immutable coverage pools, and a permissionless pool creation process that allows for customization and iteration over time.”

Basics

• Started in / Announced on: 18-11-2020
• Testnet release: expect to launch in April (26-3-2021).
• Mainnet release:

History

• Created by Yam Finance, in a bid to branch out of its original core aim.

Audits & Exploits

• Bug bounty program can be found [insert here].

Bugs/Exploits

• From Blockthreat (23-3-2022):

"On March 20, 2022 Umbrella Network lost $700K as a result of an underflow in its withdraw function."

Governance

• From their Litepaper (5-1-2021):

"In the event of an exploit, it is up to the arbiter to initiate a payout. This is done via an on-chain governance vote. The arbiter submits a blocktime associated with the exploit validation, allowing all active coverage covering that blocktime to receive its specified payout."

Technology

• Litepaper can be found here (5-1-2021).
• Code can be viewed [insert here].
• Built on: YAM, Ethereum

How it works

• From their Litepaper (5-1-2021):

"The Umbrella Protection Protocol is designed to enable Protection Providers to earn premium fees in return for staking funds to be paid out in the event of an exploit to Protection Seekers, who purchase coverage at a specific rate for a custom duration. There are two pool types in the protocol, one accessed by Protection Providers and one by Protection Seekers. The first pool type are the MetaPools, which are funded by Protection Providers and provide coverage on the second pool type, the Coverage Pools, which are accessed individually by the Protection Seekers. Each MetaPool is made up of Coverage Pools, which provide protection on specific protocols or contracts. An example of a MetaPool could be “Lending Protocols” while the Coverage Pools that Seekers could access would be “Compound”, “Aave”, “Cream.” If any of those protocols experienced an exploit deemed valid by the arbiter of the MetaPool, a portion of the Provider’s stake would be used in a payout to Seekers who had purchased coverage in the affected protocol’s Coverage Pool."

Staking

• From their Litepaper (5-1-2021):

"Protection providers receive cashflows in the form of premiums in return for staking capital in the protection MetaPools. The protection MetaPools cover multiple contract pools, and if any underlying contract pool has a valid exploit, a portion of the seller’s stake is paid out to the affected contract pool’s protection seekers. In return for this risk, protection providers receive premiums determined by the utilization rates of each contract pool. The pricing of these premiums is set according to the interest rate function of the MetaPool. Premiums for coverage are received when sweep() is called at the end of seeker’s coverage period. Providers are able to withdraw their stake at any time, but the withdrawal is subject to a holding period specified at MetaPool creation. Utilization cannot exceed 100%, so Providers may only withdraw up to that point."

Roadmap

• Can be found [Insert link here].
• Says it is 75% done (15-1-2021).

Pros and Cons

Pros

• From an AMA (26-3-2021):

1. "Umbrella has a very flexible product design that allows us to make it available to any other DAO, regardless of how established their products are. We have seen that yield farmers require risk coverage and that insurance solutions oftentimes lag behind the arrival of new farms, thereby limiting their adoption. Umbrella can solve this problem.
2. MetaPools can be created by YAM but also by other DAOs which cannot get coverage through other insurance protocols. This opens up a new route that has not been tested before.
3. Protection buyers hold NFTs that can be sold on the market.
4. Umbrella allows for partial payouts"

Team, Funding, Partners

Team

• Full team can be found [here].
• Created by the Yam Finance community.

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