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  • How exactly is the Premium calculated?
  • Current protocol constants
  1. Get Insured
  2. Getting Insured

Premium calculations

PreviousGetting InsuredNextPolicy Terms

Last updated 1 year ago

How exactly is the Premium calculated?

P_min - Minimum Premium (expressed in %) TP_max - Target maximum Premium when the asset is considered risky (expressed in %) UR_risky - Utilization Ratio for pricing model when the asset is considered risky (expressed in %) P_max - Maximum Premium when the utilization ratio equals 100% (expressed in %) UR - Utilization ratio (expressed in %) %P - % Premium in regards to the size of the Policy %P_final - final, % Premium in regards to the size of the Policy

UR=Capacity+Policy SizeLiquidityUR=\frac {Capacity+Policy\:Size} {Liquidity}UR=LiquidityCapacity+PolicySize​
if UR<URriskyā€…ā€ŠāŸ¹ā€…ā€Š%P=URURriskyāˆ—TPmaxif\:UR<{UR}_{risky} \implies \%P=\frac{UR}{UR_{risky}}*TP_{max}ifUR<URriskyā€‹āŸ¹%P=URrisky​URā€‹āˆ—TPmax​
if UR>URriskyā€…ā€ŠāŸ¹ā€…ā€Š%P=TPmax+URāˆ’URrisky100%āˆ’URriskyāˆ—(Pmaxāˆ’TPmax)if\:UR>{UR}_{risky} \implies \%P=TP_{max}+\frac{UR-UR_{risky}}{100\%-UR_{risky}}*(P_{max}-TP_{max})ifUR>URriskyā€‹āŸ¹%P=TPmax​+100%āˆ’URrisky​URāˆ’URriskyā€‹ā€‹āˆ—(Pmaxā€‹āˆ’TPmax​)
%Pfinal=max{%P,Pmin}\%P_{final}=max{\{\%P, P_{min}\}}%Pfinal​=max{%P,Pmin​}
Annualized Premium Cost=Policy Sizeāˆ—%PfinalAnnualized\:Premium\:Cost = Policy\:Size * \%P_{final}AnnualizedPremiumCost=PolicySizeāˆ—%Pfinal​

Current protocol constants

P_min = 1.8% TP_max = 10% UR_risky = 85% P_max = 30%

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