Detailed User Flow
The BQ Labs platform provides a seamless and decentralized process for Sponsor, Stakers, and Proposers to engage with insurance products and earn yields through underwriting and investment. Each participant interacts with the platform through distinct processes that are designed for flexibility, security, and profitability. Below is a detailed breakdown of the flow for each user role.
Sponsor’s Flow:
Sponsor act as lead insurers, typically institutional investors, responsible for creating insurance pools and attracting liquidity.
Pool Creation: Sponsor create pools that cater to specific risks within the DeFi ecosystem. They define parameters such as coverage limits, the type of digital assets to be used (e.g., Bitcoin, ETH, stablecoins), and the kinds of risks the pool will cover. Pools may range from low-risk pools covering minor risks to high-risk pools that provide coverage for more volatile DeFi activities.
Raising Capital: Sponsor incentivize Stakers to contribute liquidity to these pools by offering competitive APYs. For instance, low-risk pools may offer a stable x% APY, while higher-risk pools offer y% to reflect increased exposure to potential claims. APYs are dynamically adjusted based on the pool’s performance and claim activity.
Launching the Pool: Once sufficient liquidity is raised, the pool is launched on the Insurance Marketplace, where Proposers can purchase coverage to protect their assets. The pool becomes active and starts underwriting risk, providing liquidity to stakers and coverage options to proposers.
Staker’s Flow:
Stakers provide liquidity to the insurance pools, effectively underwriting risks in exchange for yields.
Choosing a Pool: Stakers connect their wallets to the BQ platform and browse the Insurance Marketplace to select a pool based on risk and yield preferences. Pools are categorized by risk level:
AAA Pools (low-risk, low-yield)
BBB Pools (medium-risk, medium-yield)
CCC Pools (high-risk, high-yield)
Stakers choose pools that align with their risk tolerance and desired returns. For instance, a staker might opt for a low-risk pool offering x% APY for stable returns or a high-risk pool offering y% APY for higher potential yield but greater exposure to claims.
Earning Yields: Stakers earn yield in three primary ways:
Underwriting Income: A portion of the premiums paid by Proposers is distributed to Stakers as underwriting income. For example, x% of the total premium collected from Proposers is allocated to Stakers, with returns being more stable in low-risk pools and more volatile in high-risk pools.
Liquid Insurance Tokens (LITs): Stakers receive LITs, which represent their share of the pool's liquidity. LITs are tradable on secondary markets, providing additional liquidity and earning opportunities for stakers. LITs can also be used in DeFi protocols, further increasing their utility.
Investment Arm : A portion of the invested assets into the pools are invested in risk free yield earning methods to generate a substantial yield for the pools.
Dynamic Yields: The APY of a pool is dynamically adjusted based on the number of claims made against it. For example, pools with fewer claims provide more stable returns (e.g., x% APY), while pools with higher claim activity might offer reduced returns to Stakers (e.g., y% APY). This ensures that returns are sustainable while balancing risk.
Proposer’s Flow:
Proposers (or Cover Buyers) purchase insurance to protect their digital assets from risks such as protocol exploits, smart contract failures, or other DeFi-related risks.
Exploring Coverage Options: Proposers browse the Insurance Marketplace to evaluate the various pools available. They assess risk profiles and coverage terms, selecting pools that align with their needs. For example, a Proposer might opt for a low-risk pool charging x% premium or a high-risk pool charging y% premium depending on the protection required.
Purchasing Coverage: Once a suitable pool is identified, the Proposer purchases coverage by paying the premium, which is calculated based on factors such as the total value of the assets being insured, the risk level of the pool, and the pool’s historical claim performance. For example, insuring a large DeFi position in a high-risk pool may require a premium of y%, while a low-risk pool might charge x%.
Discounted Premiums for Stakers: Proposers who are also Stakers in the same pool may receive discounted premiums, incentivizing deeper participation in the BQ ecosystem. For example, if a Proposer is also staking in the pool, they might receive a z% discount on the insurance premium.
Earning Yield:
Stakers on the BQ platform benefit from a dual-income model that includes both underwriting income and investment income.
Underwriting Income: Stakers earn a portion of the premiums paid by Proposers as underwriting income. For instance, x% of the premium is allocated to the pool’s stakers. If the pool has fewer claims, the yield increases. However, if more claims are made, the underwriting yield decreases slightly to ensure sufficient capital is available for payouts.
Investment Income: A portion of the staked capital and premiums is allocated to an Investment Pool, managed by the Investment DAO. The DAO diversifies the pool’s funds across multiple asset classes to generate additional returns. For example, y% of the pool’s assets may be allocated to the investment arm, which then generates yield for stakers. The Investment DAO rebalances the portfolio dynamically to optimize returns while ensuring enough liquidity is reserved for potential claims.
BQ Labs provides an intuitive and efficient user experience for all participants—Sponsor, Stakers, and Proposers. Sponsor create insurance pools, Stakers provide liquidity and earn yields, and Proposers secure their assets through flexible coverage options. The platform’s transparent claims process and dynamic yield structure make it an attractive solution for decentralized insurance, while Liquid Insurance Tokens (LITs) offer additional liquidity and earning opportunities. With a balance between security, flexibility, and profitability, BQ Labs is setting a new standard for decentralized insurance in the Bitcoin and DeFi ecosystems.
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