Integrate Atomica DeFi Insurance Layer for Asymmetry Finance

Ideas (Step 1)
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Summary
I propose that Asymmetry Finance integrates Atomica.org’s insurance/cover solution as an embedded protection layer for our ecosystem. Having a robust insurance layer will strengthen the risk profile of our protocol, attract more institutional capital, and offer greater reassurance to users and liquidity providers.

What is Atomica

Atomica is a modular insurance / cover protocol for DeFi. Some of its key features are:

  • Modular & Customizable Cover: Products are built to tailor to specific protocol risks, not “one-size-fits-all.” (Atomica Cover DAO)

  • Institutional-grade Standards: Automated claims; customizable tranches; flexibility to suit serious capital. (Atomica Cover DAO)

  • Enhancing, not Competing: Atomica sits as a trust/risk layer on top of protocols helping with safety, token utility, adoption — without conflicting with the core product. (Atomica Cover DAO)

  • Use Cases for Multiple Participants:

    1. For DeFi protocols: embedded insurance, protects TVL, helps attract institutional investors. (Atomica Cover DAO)

    2. For investors & LPs: ability to underwrite or stake in insurance pools; participate with transparent risk mitigation. (Atomica Cover DAO)

    3. For users: ability to cover against hacks, depegs, protocol failures; flexible policies. (Atomica Cover DAO)

Why Asymmetry Finance Should Adopt Atomica

Here are the reasons this integration could bring real value:

  1. Risk Mitigation & Institutional Trust
    One of the major obstacles for DeFi protocols aiming for institutional capital is the lack of predictable, formal risk protection. Integrating Atomica gives us a layer of institutional-grade insurance, which can help reduce perceived risk from security issues, smart contract bugs, or slashing events, and give investors more confidence in locking up capital.

  2. Improved Token Utility
    By integrating Atomica, our native token can gain additional utility: e.g. staking or underwriting insurance policies, participating in risk tranches. That gives holders more reasons to hold and engage with the token. It’s a way to deepen engagement and align incentives.

  3. More TVL & Liquidity Provider Confidence
    LPs are highly sensitive to risk. Without insurance, one single exploit or bug can cause large capital flight. If we can offer protection or partial cover, LPs may be more willing to commit long-term capital, reducing volatility and risk exodus.

  4. Competitive Differentiation
    In a crowded DeFi environment, protocols that offer embedded insurance have a competitive advantage. It signals maturity, seriousness about security, and appeals to more risk-averse participants, which includes bigger funds, institutions, and possibly regulators.

  5. Complementary, Not Distractive
    Atomica is designed to overlay existing protocols; it does not require reinventing core mechanics. The integration effort is moderate compared to building a bespoke insurance scheme. Our core product remains Asymmetry’s, with Atomica adding trust and protection.

Conclusion

Integrating Atomica’s insurance layer is not just “nice to have”,it could become a key differentiator and trust builder for Asymmetry Finance. It helps improve safety, institutional appeal, LP confidence, and token utility. While there are costs and complexity involved, the upside in risk mitigation and institutional credibility makes this a proposal worth serious consideration.

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Not a lot of numbers pertaining costs… not a bad idea otherwise IMHO.

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I agree with Roman on this. Love the idea, but would need to see the numbers. I’m sure it varies for custom solutions and the team would likely need to have a consultation with Atomica. I say we keep an open mind to this, because embedded insurance would certainly increase user confidence.

While we explore this idea, let’s do a comparison of Nexus Mutual and Atomica:

Nexus Mutual vs. Atomica: Insuring USDaf

Nexus Mutual (Since 2019)

  • Pool Size: $100M+, $300M active coverage.

  • Coverage: Hacks, depegs, oracle failures for USDaf minting/borrowing.

  • Premiums: 3-5% APY (e.g., $4K on $100K position).

  • Integration: API-friendly, needs governance approval. Moderate effort.

  • Claims: Semi-manual, ~1-7 days. Paid $50M+ (e.g., $2.4M Euler).

  • Pros: Proven, deep liquidity, institutional trust.

  • Cons: Higher fees, slower claims.

  • USDaf Fit: Best for reliable, broad coverage to attract big LPs.

Atomica (Since ~2023)

  • Pool Size: Likely <$50M (est., no public data).

  • Coverage: Custom hacks, depegs, Liquity v2 risks.

  • Premiums: 0.5-3% APY (e.g., $1.5K on $100K).

  • Integration: Plug-and-play, hooks into USDaf flows easily.

  • Claims: Automated, instant via triggers. No major payouts yet.

  • Pros: Cheap, modular, boosts veASF utility (e.g., staking for yields).

  • Cons: Small pool, unproven at scale.

  • USDaf Fit: Ideal for quick, tailored integration; needs pool stress tests.

Quick Math ($100K USDaf, 5% yield, 1% depeg risk):

  • Nexus: $4K premium, $1K net yield. Covers $100K loss.

  • Atomica: $1.5K premium, $3.5K net yield. Same coverage.

  • Atomica’s cheaper, Nexus safer.

Recommendation:

  • Nexus: Pick for trusted, institutional-grade USDaf protection. Pilot $5M coverage at 3% APY.

  • Atomica: Pick for low-cost, custom depeg shield. Test 1% APY on USDaf loans, tie to veASF staking.

  • Hybrid: Nexus for core minting, Atomica for oracle risks.

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Had a conversation with the team at Nexus Mutual last week actually, they were great.

We were quoted the rates below for different types of covers.

Single Protocol Cover 4.06%. As standard our protocol covers have a 5% deductible

USDaf Depeg Cover: 2.33%

- Depeg conditions, 12.5% over 7 days period (will double check # days) with a 2.5% deductible

Just need LP’s/community to show interest in it and we can likely get this rolling. In addition, with the Beefy Finance vault coming online last week, users can now get coverage for the USDaf/scrvUSD LP for a really good rate thru Nexus Mutual via Beefy.

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This is great news really! I was intrigued by atomica’s tech and how veASF could have extra utility. But I 100% support safety of Nexus over another protocol. As long as it’s possible to have clear boundaries for correct payouts and no wishywashy things.

So happy you are taking the responsibility to get in contact with them. Very very very much appreciated!

Also, thanks @Wenjamin for the comparison. This is very valuable information. Maybe it could even be possible we use Atomica in the future, for other smaller insurances to still give veASF more utility.

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