Allow the ability to accept LP tokens as a means for insurance providing.
LP tokens are mathematical proof that you provided assets to a pool — and holding LP tokens hold the claim to getting those assets back.
LP tokens = guarantee to asset.
Insurance coverage scenario
Let’s assume this pool accepts LP tokens.
And Lets assume this pool also has to use the value staked to cover the buyers insurance fulfilment.
The LP tokens would have to be traded back to their value pairs and then traded to USDT(Or whatever the insurance is covering) to be able to fulfil any insurance requirements from the buyer.
Thus incurring a larger loss due to gas fees of more transactions.
2 outcomes of providing LP tokens as insurance
the loss of some LP tokens and the gas fees incurred from having to possibly transfer some to USDT (or whatever currency is required) to cover the loss of value from the buyer
the exposure of holding an LP token and possibly benefiting from insurance yield?
There may be a very good reason as to why this can’t work, I just have yet to come across this specific type of query. Please let me know down below! I wonder if the trading aspect of the insurance schema will mess with this idea
To me I’d prefer the option of using LP tokens as protection rather than just USDC; so I can be exposed to price fluctuations by the underlying assets and fees generated by the LP token pool.
Even if you didn’t, I still think allowing the option will attract users to the platform. And that’s the goal isn’t it?
A new audience will be gained for Opium Insurance . Specifically liquidity providers who can now use their LP tokens to stake, thus providing insurance coverage to whichever program is in question.
LP tokens are being staked in Opium Insurance Protection