InsureDAO, an insurance platform that covers Smart-Contract vulnerability risks and stable coins’ depeg risks, was introduced to the Aave community by its product lead, Taishi. The platform, which is currently the only insurance protocol in Optimism, aims to expand its depeg insurance in the Optimism network with the help of an Aave grant. The depeg insurance product was developed to address the increasing importance of stablecoins in the blockchain ecosystem and the recognized depeg risks. It provides a full on-chain basis depeg insurance without a complex flow for the user side, making it easier for both buyers and underwriters.

The depeg pool of InsureDAO earns leveraged yield from Aave and provides sUSD or USDT De-Peg insurance. The pool borrows sUSD/USDT from Aave every time De-Peg insurance is purchased, swaps borrowed sUSD/USDT to USDC on Curve, and leverages the capacity by supplying them to the Aave pool. The smart contract of depeg insurance is currently under auditing and is expected to launch on the Optimism mainnet in mid-October 2022. Taishi proposed a depeg insurance system that uses Aave v3 to build short positions of sUSD/USDT and underwriting pools. This system would allow buyers to claim their funds without a complex confirmation process or claim request. Underwriters would only need to withdraw the deposit amount and claim the accrued rewards earned from Aave deposit.

Taishi requested a grant of USD15k from Aave grant DAO, with USD5k for depeg pool buyers and USD10k for repeat buyers. The grant would be used to incentivize buyers, as a great insurance product is only possible when both the buyer and the underwriter exist. The milestones set by Taishi include TVLs in Optimism of 1.5 million for the USDT pool and 2 million USD or 10% equivalent of Aave sUSD pool for the sUSD pool. Taishi expressed interest in conducting a Cross AMA, RT with each other, and a partnership announcement with Aave to help users understand the benefits and structure of the depeg insurance and contribute to the growth of Aave Optimism ecosystem. The proposal was positively received by G-Blockchain, who suggested applying for an Aave Grant, and Taishi confirmed that they have submitted the application.