SAFU value proposition
SAFU is a decentralized protocol designed as infrastructure for the permissionless creation of on-chain insurance markets. Instead of operating as an insurer, SAFU provides the primitives that allow institutions, risk curators, and protocols to freely design, price, and scale insurance markets in a transparent and capital-efficient way.
The Current Insurance Landscape
DeFi insurance today suffers from limited scalability, fragmented liquidity, and inefficient pricing models. Most solutions still rely on upfront capital commitments, fixed premiums, or rigid pool designs.
Across both TradFi and DeFi, insurance has historically required paying capital upfront, creating friction, opportunity cost, and barriers to participation. SAFU introduces a new market structure that removes these inefficiencies.
What SAFU Enables
No Upfront Premiums
Insurance coverage is funded over time through yield sacrifice, eliminating the need for upfront payments.
Capital-Efficient Risk Transfer
Users maintain exposure to yield-bearing assets while improving risk-adjusted returns through on-chain insurance.
Programmable Risk Tranching
Risk can be tranched into multiple layers, each with distinct loss absorption rules and yield allocation, fully configurable by the risk curator. This enables tailored risk–return profiles for different underwriters.
Liquid Insured Positions
Coverage holders receive liquid receipt tokens representing insured assets, reducing opportunity cost and preserving flexibility.
Scalable Insurance Markets
Markets can scale organically, supported by underwriting capital sourced from restakers or native vaults.
Transparent, Market-Driven Pricing
Risk is priced through open participation, enabling fair and adaptive insurance markets.
Example: sUSDe Insurance Market
A risk curator can define an insurance market for sUSDe, where holders sacrifice a portion of their yield in exchange for protection against protocol, insolvency, or depeg risk.
Underwriting capital is provided by restakers who opt into the market, acting as a backstop in the event of a loss, in exchange for the yield generated by insured positions.
The risk of sUSDe can be tranched into multiple layers, fully configurable by the risk curator. Each tranche absorbs losses at different thresholds and receives a different share of the yield, allowing customized risk–return profiles for underwriters.
Coverage holders receive safuUSDe, a safer representation of sUSDe backed by non-correlated underwriting capital. While safuUSDe yields less than the underlying asset, it embeds continuous insurance protection.
Last updated