FAQ
1. What is BQ Labs and why is it critical for Bitcoin's ecosystem?
BQ Labs is the first decentralized insurance protocol designed for the Bitcoin ecosystem. It offers decentralized risk management solutions for Bitcoin and BTCFi activities, ensuring protection against DeFi risks, encouraging institutional Bitcoin adoption, and enabling trustless underwriting.
2. How does BQ Labs manage risks in the Bitcoin Layer 2 ecosystem?
BQ Labs provides risk management solutions for Bitcoin Layer 2 (L2) protocols. It allows users to insure their assets, including native Bitcoin staking, bridge protocols, and other BTC-related DeFi activities. Risks such as smart contract vulnerabilities, slashing, and bridge failures are mitigated using customized insurance pools that users can participate in by providing liquidity or purchasing coverage.
3. What are Liquid Insurance Tokens (LITs) and how do they benefit stakers?
LITs are tokens representing stakers’ participation in an insurance pool. They are tradable and provide liquidity without requiring stakers to exit the pool. Additionally, LITs can be used in other DeFi protocols, unlocking extra liquidity and potential earning opportunities for stakers.
4. What makes parametric claims important for insurance?
Parametric claims are automated and triggered when specific predefined events occur, such as a smart contract exploit. This removes the need for manual review, ensuring instant payouts for Proposers. Parametric claims are essential for reducing delays, improving transparency, and guaranteeing quick compensation for commonly insured risks.
5. How is BQ Labs different from traditional insurance protocols?
BQ Labs is a decentralized, trustless protocol that eliminates intermediaries and automates insurance processes through smart contracts. Unlike traditional models, BQ Labs introduces insurance as a new asset class with Liquid Insurance Tokens (LITs), enabling stakers to trade their positions and gain liquidity. The protocol also offers innovative benefits like cross-chain risk coverage and yield generation through staking, making it a more versatile and transparent insurance solution.
6. What role do sponsor play in BQ Labs?
Sponsor create custom insurance pools by setting parameters such as asset coverage, risk limits, and liquidity targets. They manage the risk and attract stakers by offering competitive APYs. Sponsor play a key role in underwriting Bitcoin DeFi activities and earning revenue from premiums collected in their pools.
7. How do stakers earn yields on BQ Labs?
Stakers earn yields by providing liquidity to insurance pools. The APY they receive is based on the performance and risk profile of the pool. Yields are dynamically adjusted based on the number of claims, the total premium collected, and pool activity, ensuring stakers are rewarded proportionally to the pool’s success.
8. How does BQ Labs manage cross-chain risks in Bitcoin Layer 2?
BQ Labs supports cross-chain interoperability within the Bitcoin Layer 2 ecosystem. Through the BQ Chain, the platform enables insurance coverage for various Bitcoin L2 protocols and manages risks across these networks. By consolidating liquidity from different pools, BQ Labs ensures efficient claims processing and seamless integration across Bitcoin-related ecosystems.
9. What types of risks does BQ Labs cover?
BQ Labs provides insurance for various risks, including:
Wrapped Bitcoin assets
Slashing penalties from staking
Smart contract vulnerabilities
Bridge exploits
Governance failures
Stablecoin de-pegging
This comprehensive coverage allows users to protect their Bitcoin and DeFi positions from a wide range of potential threats.
10. How does BQ Labs ensure fairness in governance-based claims?
Governance-based claims are reviewed by a team of security experts and risk analysts who specialize in evaluating DeFi risks. To ensure fairness, these experts are incentivized through a reward model tied to the accuracy and transparency of their claim assessments, promoting unbiased and efficient decision-making throughout the process.
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