Insurance is an additional safety measure designed to offer more protection to lenders in the event of a default.

The insurance fund will maintain pools of capital per strategy to allow for greater strategy diversity and risk isolation. Additionally, the insurance fund will grow by taking a percent of the borrow cost and liquidation premiums, so the most risky and high-yield strategies should also have the largest funds.

In the event of a default, the insurance fund will automatically be dispersed to lenders attempting to make up for any loan loss.

The current insurance premium on borrows and liquidations is 5% and 7.5% respectively.

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