Coverage Providers

What is a Coverage Provider?

A Coverage Provider is a participant who commits capital to provide coverage for Coverage Seekers. A Coverage Provider would generally either be:

• a participant who is confident in the protocol; or

• protocol developers seeking to prove confidence in their own protocol and make coverage cheaper for their users by increasing the pool of available coverage

Why be a Coverage Provider?

As a Coverage Provider, you can earn quick, upfront premiums from Coverage Seekers and also STAG token rewards. If there are no claims by expiration, Coverage Providers can redeem all of their initial capital committed.

On the other hand, Coverage Providers also stand to lose part or all of their capital provided when a valid claim is made. That being said, the upfront premium and STAG tokens earned would offset some of the losses.

Coverage Providers should also note that should the funds in the capital pool fall below the MCR, they will not be able to withdraw their capital committed.

Multi-asset Provision Option

Stag Finance's innovative multi-asset coverage provision system allows Coverage Providers to choose from a range of accepted digital assets beyond stablecoins to provide coverage. This allows Coverage Providers to retain their alpha in currently held assets and valuable price exposure, while earning premiums from Coverage Seekers. This reduces the barrier to entry for Coverage Providers, and also allows greater portfolio flexibility during the course of coverage provision.

A Coverage Provider's contribution stake in coverage pools is calculated dynamically according to the worth of the assets in USD value at each point of time, and STAG tokens are correspondingly awarded in accordance to contribution value in dollar terms.