Proposal : Insurance product for USD/EUR hedging

Governance
1

Summary

Hello, I would like to propose an insurance product to hedge european traders against the risk of a USD crash.

Rationale

The first numerical currency backed by real euro (EURL) has been avalaible on the Tezos blockchain : http://www.lugh.io/ and tradeable on coinhouse : EUR-L, the first euro digit | Coinhouse .

There could be an interesting insurance product for european traders, since almost all numerical FIAT trading pairs are in usd, that will hedge them for the risk of an USD crash in the USD/EUR. Thus, european traders can build a strategy on USD values without worrying if this would be a good strategy in EUR.

TODO

  1. Choose the numerical currency that will be used for the pair (USDT ? USDC ? BUSD ?)
  2. Create an oracle that will track the USD(T-C-whatsoever)/EURL pair
  3. Define the percentage of loss in the USD/EUR that activate the insurance for the buyer
  4. Define the currency to stake by insurance providers for the protection
  5. Create the insurance product

Executors

  • Opium team
3 Likes
2

Sounds good! Welcome to the forum. :grin: So this means people stake e.g. USDT, to provide EURO to USD value protection?

3

Thank you !
That is still to define, I’m not a good financial engineer, but yes that would be a possible implementation of this ! I’m adding it to the TODO part :smile:

1 Like
4

I edited it to give numbers to identify clearly the TODO points. If I add any, I will give “bis” “ter” etc to keep things correct.

For the 1. point, a good idea would be to take the mean between a lot of numerical-USD, because we aren’t sure if we take only one that it will have always the 1-1 dollar value.
A second idea would be an oracle that would use directly the USD/EUR value on classical markets, without any concern about crypto.

What do you think about it ?

5

Hi Killbear. Welcome to our growing community!

I personally like the idea, we have discussed it several times but did not put its priority high enough.

I will bring it to out team brainstorm tonight.

My addition: to create simple primitive that tracks EUR/USD movements. It can be hedged by arbitrageours with centralised exchanges the same way they hedge everything else.

Step two: create simple insurance product that insure EUR rate and allow people to hedge by participating in this insurance.

Step three: pack this insurance together with DAI/USDT/… So, DAI+Hedge = Euro stable coin!

6

I’m working on this / something similar here: GitHub - tarteo/eur-insurance: EUR insurance derivative for Opium Network
Would love to get feedback on it. This is my first derivative / (real) solidity project and like to learn more. Please be gentle :grin:

3 Likes
7

Great work, I do not have any competence in solidity so I couldn’t help you very much, but I’m sure that the team will have a look at it :smiley:

1 Like
8

Great job Dennis, our devs are on top of it and if all is ok we would love to deploy it to Matic/ETH chain.

9

Thanks! It’s currently a pretty simple / stupid protection but I want to make it better. Feel free to copy, change, improve whatever you want it’s MIT licensed. I have to add the license in GitHub though :stuck_out_tongue: