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=LiquidityCapacity+PolicySizeā ifUR<URriskyāā¹%P=URriskyāURāāTPmaxā ifUR>URriskyāā¹%P=TPmaxā+100%āURriskyāURāURriskyāāā(PmaxāāTPmaxā) %Pfinalā=max{%P,Pminā} AnnualizedPremiumCost=PolicySizeā%Pfinalā Current protocol constants
P_min = 1.8%
TP_max = 10%
UR_risky = 85%
P_max = 30%