Drift Protocol v2

โŒ˜K
๐Ÿ‘พWelcome to Drift Protocol
๐ŸงฎDrift DEX
๐Ÿ‘‹Getting Started
๐Ÿ“ˆPerpetual Futures
๐Ÿ“ŠSpot Margin Trading
๐ŸฆBorrow & Lend
๐Ÿ›๏ธStaking
๐Ÿ”ฌTechnical Explanations
๐Ÿ“Accounting and Settlement
โž—Borrow Interest Rate
๐Ÿ“œDelisting Process
โ›ฒDrift AMM
๐ŸƒJust-In-Time (JIT) Auctions
๐Ÿ“šKeepers & Decentralised Orderbook
โ˜ ๏ธLiquidators
๐Ÿ’งLiquidity Providers (LPs)
๐Ÿ“‹Protocol Guard Rails
๐Ÿ“Risks
๐Ÿ–ฅ๏ธDeveloper Resources
๐Ÿ“”Overview
โŒจ๏ธSDK Documentation
โŒจ๏ธTutorial: Bots
โš ๏ธTroubleshooting
๐Ÿ› ๏ธKeeper Bots
๐Ÿ› ๏ธTrading Bots
โŒจ๏ธHistorical Data (v1)
โŒจ๏ธAPI
๐Ÿ›ก๏ธSecurity
๐Ÿ›ก๏ธAudits
๐Ÿ›ก๏ธBug Bounty
โš–๏ธLegal and Regulations
๐Ÿ“Terms of Use
๐Ÿ“Disclaimer
๐Ÿ“Privacy Policy
๐Ÿ“Competition Terms and Conditions
๐Ÿ“šGlossary
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8min

Insurance Fund Staking

Overview

Users that elect to stake into the Insurance Fund will be collateralising the Insurance Fund.

The Insurance Fund is the protocol's first backstop to maintaining the solvency of the protocol. All users that stake into the IF should read through and be clear on what happens to the Insurance Fund when levered losses occur (Insurance Fund).

Reward

For providing liquidity to the Insurance Fund, Insurance Fund Stakers are rewarded with their proportionate share of the Revenue Pool every hour.

The Revenue Pool is funded by various aspects of the protocol:

  1. borrow fees;
  2. spot market exchange fees;
  3. perpetual market exchange fees; and
  4. liquidiation fees.

An Insurance Fund Staker's proportionate share is calculated by: Total Staked Amount / Total Insurance Fund

Each revenue settlement is split between Insurance Fund Stakers and a protocol-owned portion of the insurance fund.

Example

  • The Insurance Fund is at $5000 USDC. You decide to stake $10,000 USDC, bringing the total to $15,000 USDC.

Your proportionate share of the Revenue Pool paid every hour for stakers would be 10000/15000 = 66.6%.

Each hour, as the revenue pool settles fees earned to the Insurance Fund, lets say $30. Half of this is resereved for the protocol, while the other half is designated for stakers, making the staker payout $15. You will receive 66.6% of the payout ($10) and the remaining Insurance Fund stakers would receive 33.3% ($5).

Cooldown Period

There is a cooldown period of 14 days for unstaking any collateral from the Insurance Fund.

A user first requests to unstake a specific amount (denominated in shares). During the cooldown period, the user still recieves rewards and is liable for user deficit resolution. After the ellapsed period, the user can then unstake. Upon unstake, a net winning during the cooldown period is forgone and split amongst the current set of stakers and while a net loss incurred by the unstaker. This means the unstake process downside only for the unstaker, and upside only for the stakers who remain.

Additionally, during the cooldown period, if a user wishes to cancel the unstake request, they forgo any gains made during the unstake request period and their share is adjusted according. Those forgone gains are also split amongst the current stakers upon cancellation.

Updated 24 Dec 2022
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Accounting and Settlement
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TABLE OF CONTENTS
Overview
Reward
Cooldown Period