DeFi Protocol Yam Finance introduces Umbrella Protocol

Due to the smart contract exploits, Yam Finance has introduced Umbrella protocol levelling protection providers and seekers on one platform.

By · Nov 20, 2020 . 6min read

Yam Finance introduces Umbrella Protocol latest news

Yam Finance, the decentralized finance (DeFi) sector’s original food-themed clone protocol, has introduced its latest project called Umbrella protocol. Yam is an experimental protocol building upon the most exciting innovations in programmable money and governance. The new projects intend to combat the smart contract exploits and make the DeFi space safer for its investors. Moreover, it plans to integrate protection providers with protection seekers in one platform. 

The Umbrella Protocol is produced with various characteristics. It includes featuring perpetual ERC20 streaming coverage, immutable coverage pools, and permissionless factory-based pool creation that allows customization and iteration over time.

According to the blog post, the Umbrella protocol is under development. They are developing the alpha version of the protocol. It intends to launch in the Yam Finance community for trialling it internally. Moreover, Umbrella protocol is inspired by Uniswap and Balancer. Its token functionality is similar to that of cTokens. 

Yam’s Umbrella Protocol comprises of MetaPool and Coverage Pools.

Umbrella protocol consists of MetaPool, where the protection providers deposit funds and earn premiums from those seeking protection. Every MetaPool has various coverage pools that cover a particular DeFi protocol or smart contract. However, protection seekers can independently avail these pools to obtain security for stipulated protocols and offer rewards for the providers. Moreover, highly configurable ‘Factories’ can determine the MetaPool’s fees, payout rates, and protocols covered.

For gaining protection, a protection seeker has to deposit funds into a coverage pool. It then receives ERC-20 tokens that track their deposits. Moreover, the protection compares to their staked funds in the Coverage pool and the protection offered in the MetaPool. Thus, a funding rate is applicable to the staked funds as a premium.

However, in case an exploit occurs on the DeFi protocol, one can send claims to the Arbiter. Upon confirming the claim to be valid by Arbiter, the MetaPool compensates an amount equivalent to the total recent stake in the coverage pool. Additionally, it also compensates any other funds employed by other coverage pools in the MetaPool.

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