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INSUREFI Protocol Overview

INSUREFI is a rule-based digital asset coverage framework designed specifically for high-risk, high-volatility token environments. It operates as a non-custodial protection layer, allowing users to mitigate specific loss events through on-chain verifiable claims.

Unlike traditional insurance, which relies on subjective assessment, INSUREFI utilizes deterministic criteria to evaluate claim validity, ensuring transparency and reducing counterparty risk.

Problem Statement

On-chain markets currently operate without standardized safeguards. "Rug pull" events—where token liquidity is abruptly removed—are frequent, leaving participants with assets that possess no market value.

Existing solutions often rely on trusted intermediaries or off-chain promises that are difficult to enforce. Consequently, users lack a structured, reliable resolution mechanism when malicious market events occur.

Protocol Design

The INSUREFI protocol is built on three core principles:

  • Deterministic Rules: Verification is based on objective blockchain data (liquidity removal, price action).
  • Wallet-Based Eligibility: Coverage is tied directly to the holding wallet and verified on-chain.
  • No Discretionary Approvals: The system does not rely on human claims adjusters for standard event validation.
Event Detection→Criteria Check→Eligibility Snapshot→Claim Decision

Coverage Framework

Coverage is defined as a structured recovery mechanism triggered by predefined on-chain conditions. The framework determines the maximum recovery amount based on account tiering and token holdings.

Definition: Coverage Activation

coverage_status = ACTIVE if:
1. Token_Price == 0 OR Liquidity_Pool == REMOVED
2. Event_Time > Coverage_Start_Time
3. Claimant_Wallet_Holdings >= Minimum_Threshold

Eligibility Rules

To maintain system solvency and fairness, strict eligibility rules are enforced:

  • Token Holding Requirement: Users must hold INSUREFI tokens in the claiming wallet at the time of the event and claim submission.
  • Snapshot Timing: Holdings are evaluated based on the block height of the claim submission.
  • One Claim Per Wallet: Each wallet address is permitted a single successful claim payout.
  • Claim Finality: Once processed, a claim decision is irreversible.

Claim Lifecycle

The lifecycle of a claim follows a linear progression from submission to settlement.

  1. Wallet Verification: The protocol confirms the connecting wallet holds the required identifiers.
  2. Balance Snapshot: A read-only check of the wallet's INSUREFI token balance is performed.
  3. Claim Submission: The user submits the transaction hash of the rug pull event.
  4. Event Verification: The protocol or oracle verifies the liquidity removal and price drop.
  5. Token Transfer Validation: The user transfers remaining worthless tokens (if applicable) or proves ownership.
  6. Decision Issuance: Payment is authorized or denied based on the aggregation of the above data.

Token Mechanics

The INSUREFI token serves as the primary access key for the coverage protocol. Holding the token is a strict requirement for eligibility.

This "proof-of-holding" mechanism ensures that coverage capacity is reserved for active protocol participants. During a claim execution, specific token interactions (burning or locking) may be required to finalize the settlement process.

Risk & Limitations

Users must be aware of the following system limitations:

  • Limited Scope: Not all trading losses qualify. Soft rugs, slow bleeds, or market dumps do not trigger coverage.
  • Price-to-Zero: Coverage is strictly for total loss events (approx. 0 value).
  • Oracle Risk: Reliance on external data feeds means potential for delayed data or synchronization errors.
  • Market Risk: The value of the recovery asset itself is subject to market volatility.

Governance

Currently, protocol parameters (coverage limits, eligibility thresholds, allowed asset types) are managed by the core team to ensure stability during the initial launch phase.

Future updates may introduce decentralized governance mechanisms, allowing token holders to vote on risk parameters and framework adjustments.

Disclosures

No Guarantee of Recovery: Participation in the protocol does not guarantee 100% reimbursement of losses. Coverage is limited by the protocol's available liquidity and specific framework terms.

Non-Custodial: INSUREFI never takes custody of user assets outside of the specific claim settlement flow.

Finality: All protocol rules and on-chain determinations are final. By using the platform, you accept the framework "as is" without warranty.