LayerCover

Buying Cover

Step-by-step guide to purchasing your first LayerCover policy

TL;DR: Connect wallet → Browse pools → Choose amount & duration → Pay premium → Receive Policy NFT.

Before You Start

Prerequisites:

  • A Web3 wallet (MetaMask, Rabby, WalletConnect-compatible)
  • Connected to Base network
  • USDC in your wallet for premium payment
  • The asset you want to cover (for vault cover only)

Interactive Walkthrough

Connect Wallet

Connect your Web3 wallet (MetaMask, Rabby, or any WalletConnect-compatible wallet) and switch to the Base network. Make sure you have USDC for the premium payment.

💡

If you're new to Base, you can bridge assets from Ethereum using the official Base Bridge.

Step 1 of 5

Step-by-Step Guide

1️⃣ Browse Available Pools

Navigate to the Marketplace and browse available coverage pools. Each pool is categorised by risk type:

CategoryWhat It CoversExample
Stablecoin DepegLoss of peg for stablecoinsUSDC, DAI, FRAX
Vault CoverSmart contract exploits on yield vaultsAave aUSDC, Compound cUSDC

Each pool shows a risk rating (AAA to C), current premium rates, and available capacity.

2️⃣ Configure Your Policy

Select a pool and configure:

  • Coverage Amount - How much protection you need (in USDC)
  • Duration - Fixed-term protection, with duration options defined by each pool
  • Premium - Automatically calculated based on the pool's fixed rate

The premium formula is straightforward:

P=Coverage×Rate (bps)×Duration (days)365×10,000P = \frac{\text{Coverage} \times \text{Rate (bps)} \times \text{Duration (days)}}{365 \times 10{,}000}

Estimate Your Premium

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Premium Calculator

$1K – $100K
5.0% APR
$123.29
Total Premium
$1.37
Per Day
$10,000
Coverage
P = (10,000 × 500 × 90) / (365 × 10,000) = $123.29

3️⃣ Approve & Purchase

The purchase is an atomic, two-step on-chain transaction:



    

  1. Approve USDC spending for the premium amount
    2. 

  2. Confirm the purchase transaction
    3. 

  3. Your Policy NFT is minted directly to your wallet
    4. 



4️⃣ Coverage Active


Your coverage is active immediately upon purchase.
7-Day Cooldown: Claims cannot be filed for the first 7 days after purchase. This governance-defined waiting period prevents opportunistic purchases after an exploit has already begun. If an incident is reported before your purchase during this window, your cover for that event is void.


Vault Cover: Additional Steps


If you're purchasing cover for ERC-4626 vault shares (e.g., Aave aUSDC, Compound cUSDC):


    

  1. The protocol snapshots your position's USDC value at purchase time
    2. 

  2. You retain full custody of your vault shares and continue earning yield
    3. 

  3. When claiming, you transfer the shares and receive a payout at the snapshotted value
    4. 


  
    
📋 Managing Policies →

    
Transfer, cancel, or renew your coverage

  
  
    
⚡ Filing Claims →

    
What to do when a covered event occurs

  



After Purchase


Once you have your Policy NFT:


    

  • View your active policies on the dashboard
    • 

  • Transfer the NFT to another wallet - the new holder can file claims
    • 

  • Cancel early for a pro-rata refund of unused premium
    • 

  • Wait for expiry - the NFT remains in your wallet but coverage lapses
    • 





Next Steps

How is the snapshot value calculated?

The protocol reads the vault's `convertToAssets()` function at the block of purchase to determine the USDC-equivalent value of your shares. This becomes the maximum payout amount. If the vault appreciates after purchase, the extra yield is yours to keep - but the payout is capped at the snapshot.