Favorite stablecoin depegged? There’s insurance for that.

Etherisc is rolling out coverage to protect USDC holders if the stablecoin falls between 5% to 20% from its pegged price for longer than 24 hours.

In the event of a USDC depeg from $1, the decentralized peer-to-peer insurance protocol will deposit automated pre-specified payouts into non-custodial wallets.

Circle claims that roughly 80% of USDC is backed up by short-dated U.S. Treasury bonds while the rest is in bank deposits. Etherisc thus only covers 20% of a wallet’s USDC as they see this as being the only capital at risk.

“If [a wallet] has 100,000 USDC and there is a depeg to 80%. Then he has lost 20% and we will reimburse exactly the 20%,” co-founder of Etherisc Christoph Mussenbrock told Decrypt. “If it depegs more to—what is actually impossible—to 60%, then he would lose $40,000, and we would reimburse still the $20,000.”

Etherisc has tapped Chainlink’s USDC-to-USD price feed to notify the protocol when the stablecoin’s price drops below $0.995, at which point the protocol then enters a “triggered state.”

If the price does not recover within 24 hours, the protocol enters a “depegged state” where customers can claim a USDT payout.

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Author: Ryan Gladwin

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