How our multilayer security includes insurance for trade losses
Dexe Investment is so hotly anticipated not only because of how amazing it is at connecting traders and investors. The true secret weapon of the platform is how it creates and maintains trust by going above and beyond on security.
First of all, all our smart contracts go through all kinds of tests and external audits to ensure their safety — no room for error when people’s money is at stake.
Our second layer of security is our transparency: every trader fund on Dexe Investment has detailed, transparent, and up-to-date information so that anyone can make an informed decision on whom to trust with their capital.
The third layer is the funding coefficient, where the more investor capital a trader wants to accept the more of his own capital he must put into the fund. Skin in the game is a very powerful motivator to be extra smart with investor money.
Finally, we have the completely unprecedented fourth layer of security that allows for insurance payouts in case a fund loses money in a big way. Sure, even the best traders win some trades and lose others. But if the fund overall is deep into the red, you may have a recourse the likes of which the world of investing (crypto or not) has not seen ever before. Here is how it works.
The insurance pool
Traditionally, individual contributions have always been pooled to maintain enough funds for large payouts. Dexe puts a sweet twist on that model, requiring no user funds to be spent on insurance payouts. Instead, ⅓ of the trading fees that DEXE collects from the actual insurance pool fund.
Staken not sold
Once again, you are not putting any DEXE into the insurance pool. Instead, you are merely staking DEXE that can be withdrawn even the next day (you won’t be able to submit a proposal for compensation if you withdraw them, of course). And when insurance compensation is paid out, it is in no way deducted from your staked DEXE (but rather from that ⅓ of the trading fees Dexe collects).
Your insurance coverage eligibility is for 10x of how much DEXE you stake. So to get all of your investment insured, you need to deposit the DEXE equivalent of 10% of your total investments in Dexe Investment. So if you’re investing 1000 DEXE and want a chance for the insurance pool to cover it, deposit 100 DEXE into the insurance pool. You don’t have to get separate insurance for each fund into which you invest. If you then go on to invest more into any Dexe Investment funds, you should deposit more into the insurance pool — up to 1/10th of your total investments if you want all of them to be eligible for insurance payouts.
Important: Depositing into the insurance pool does not guarantee payout but merely gives you the right to create a proposal for getting compensated. With DeXe being a DAO, there is a process for adjudicating proposals (similar to car insurance claims but much more decentralized).
When any of the funds in which you are invested suffers a major loss (i.e. when the price of its LP token tanks), you submit your proposal via the appropriate section of your Dexe Investment trading app. It only takes a few simple steps, including indicating the LP token price before the event that caused it to crash, your wallet address, a note about what happened and why you believe it deserves insurance compensation, and a link to a forum thread to discuss it. This way, the community can discuss the proposal, and adjudication can be made in an informed, thoughtful, and authentically DAO manner.
Will I get compensated?
This is up to the community and the open discussion about your proposal. Presumably, it is in the interest of the community to maintain a fair and consistent compensation practice that both alleviates exceptional losses and prevents frivolous proposals. This is a tight rope to walk, which is why we trust in the power of the community to find the right balance. If you are part of the community as a DEXE token holder, you have the same rights and abilities to participate in the discussion about the proposals policy and can submit and upvote proposals on any changes as part of our DAO governance.
Like with all insurance, you need to have it before the fact. In this context, this means that only the LP losses after you insured your investment will be eligible for insurance payouts. This prevents abuses of the system such as finding a fund with an LP already in the negative territory and taking out insurance to create a proposal for losses for which you were never at a risk.
No insurance payments can exceed ⅓ of the available insurance pool. So if, for example, the pool has 3,000 DEXE and the vote decided that two people need to be compensated 1000 DEXE each, they will actually be compensated 500 DEXE each to keep ⅔ of the pool available for the adjudication of other insurance proposals.
So this is DeXe Investment Insurance in a nutshell. And it’s not even the first (or 3rd) layer of security on the platform. The best part is that with the funds’ LP losses thus mitigated with insurance, it only makes trading wins so much sweeter.