Coverage Types

Stablecoin depeg and vault cover explained

TL;DR: LayerCover currently offers two launch coverage types: stablecoin depeg protection and vault share protection.

At a Glance

	💵 Stablecoin Depeg	🏦 Vault Cover
Protects	Stablecoin peg loss	Yield vault shares
Asset Examples	USDC, DAI, FRAX	Morpho Vault
Claim Trigger	Permissionless (asset swap)	Permissionless (asset swap)
Resolution	Deterministic (1:1 swap)	Deterministic (snapshot value)
Payout Speed	Instant	Instant
Custody	Transfer depegged tokens	Transfer vault shares

Protects against loss of peg for stablecoins. If a covered stablecoin deviates significantly from $1, you can claim.

How it works:

Your policy covers a specific USDC amount on a specific stablecoin pool
When a depeg event is confirmed, you transfer your depegged tokens to the protocol
You receive full USDC value based on your coverage amount
The protocol holds the depegged tokens as salvage - they may recover value later

Think of it as a put option. You're buying the right to sell your stablecoin at $1, regardless of current market price.

Protects yield-bearing vault shares against smart contract exploits, hacks, or other loss events.

How it works:

At purchase, the protocol snapshots your vault position's USDC value
You retain full custody of your vault shares and continue earning yield
If the vault is exploited, you transfer shares and receive the snapshot value in USDC
The protocol retains the (potentially worthless) shares as salvage

Key distinctions from stablecoin cover:

You want to protect...	Choose...	Why
USDC or DAI holdings	Stablecoin Depeg	Direct 1:1 peg protection
Aave/Compound deposits	Vault Cover	Snapshot-based vault protection
Multiple positions	Multiple policies	One policy per risk - diversify!