DeFi Insurance for DAO Treasury Management

Detailed Instructions

Begin by mapping the entire treasury across all chains and protocols. Use a portfolio tracker like DeBank or Zapper to aggregate holdings. Categorize assets by risk profile: stablecoins (low), volatile assets (high), and LP positions (medium-high). For each smart contract interaction (e.g., staking, lending), identify the counterparty risk and potential failure modes, such as oracle manipulation or contract bugs.

• Sub-step 1: Export a full list of treasury addresses and their associated chains.
• Sub-step 2: For each DeFi position (e.g., Aave aUSDC, Curve LP token), note the protocol, TVL, and audit status.
• Sub-step 3: Calculate the potential maximum loss per category, focusing on large, concentrated positions.

Tip: Prioritize coverage for assets with high probability or severity of loss, often starting with custodial risk in bridges and lending protocols.

Detailed Instructions

Evaluate providers like Nexus Mutual, InsurAce, or Unslashed Finance based on capital efficiency, claims process, and covered protocols. Discretionary cover (Nexus Mutual) requires manual claims assessment but offers broad protection. Parametric cover (Uno Re) pays out automatically based on oracle-verified events, offering speed but less flexibility. Analyze the coverage parameters: sum insured, duration, premium cost (often 2-5% APY), and any exclusions.

• Sub-step 1: Compare the whitelisted protocols and specific risk types (smart contract failure, custodial, slashing) each provider covers.
• Sub-step 2: Request a quote for your desired coverage amount, typically for a 3-12 month term.
• Sub-step 3: Verify the capital backing of the underwriting pool to assess the insurer's ability to pay claims.

javascriptCopy
// Example: Fetch quote parameters from Nexus Mutual API
const quoteParams = {
  coverAmount: ethers.utils.parseEther('100'), // 100 ETH
  coverPeriod: (365 * 24 * 60 * 60), // 1 year in seconds
  contractAddress: '0xC02aaA39b223FE8D0A0e5C4F27eAD9083C756Cc2' // WETH
};

Tip: For novel or large positions, engage with the provider's underwriting team directly to discuss custom coverage terms.

Detailed Instructions

Draft a formal governance proposal detailing the risk assessment, chosen provider, coverage terms, and cost. Include a multisig transaction or a module call (e.g., via Zodiac's Reality module) to execute the purchase. For platforms like Nexus Mutual, purchasing cover requires calling the buyCover function on the Cover contract, paying the premium in NXM or DAI.

• Sub-step 1: Create a Snapshot vote outlining the proposal, linking to the full risk assessment.
• Sub-step 2: Upon passage, prepare the calldata for the cover purchase. For a 100 ETH cover on WETH for 1 year, the premium might be ~3 ETH.
• Sub-step 3: The designated multisig or safe executes the transaction, ensuring the treasury holds the required premium tokens.

solidityCopy
// Simplified example of Nexus Mutual buyCover call
// function buyCover(
//   address[] calldata _coverDetails,
//   uint256 _coverPeriod,
//   bytes calldata _coverData
// )
bytes coverData = abi.encode(
  uint256(100 ether), // sumAssured
  uint256(block.timestamp + 365 days), // coverEnd
  address(0xC02aaA39b223FE8D0A0e5C4F27eAD9083C756Cc2), // asset
  uint256(0), // premiumInNXM (0 for payment in asset)
  address(0xDAO_MULTISIG) // paymentAsset (DAI address if not NXM)
);

Tip: Always do a test transaction on a testnet or via Tenderly simulation with the exact parameters before mainnet execution.

Detailed Instructions

Establish ongoing monitoring for all active insurance positions. Use a dashboard or set up alerts for policy expiration and any changes in the covered protocol's risk assessment (e.g., a downgrade in Nexus Mutual's risk assessment score). Keep a record of the policy ID, expiration timestamp, and claims procedure. If a covered event occurs, immediately gather evidence, such as transaction hashes of the exploit and relevant block numbers.

• Sub-step 1: Schedule calendar reminders for policy renewal 30-60 days before expiration.
• Sub-step 2: Periodically re-assess the premium cost versus the treasury's risk profile; consider adjusting coverage amounts.
• Sub-step 3: In the event of a claim, follow the provider's process precisely, submitting all required proof via their UI or smart contract.

Tip: Integrate policy expiry dates into your treasury management tools (e.g., Parcel or Llama) for automated alerts and reporting to the DAO.