Pricing Model

Fixed-rate intent system and the RFQ marketplace

TL;DR: LayerCover uses a fixed-rate, intent-based RFQ marketplace. Underwriters post committed quotes; policyholders select the best rate. No AMMs, no slippage.

Why Fixed Rates?

Traditional DeFi insurance uses bonding curves or AMM-style dynamic pricing - rates change with every transaction, creating uncertainty for both buyers and sellers. LayerCover uses fixed-rate pricing instead:

Dynamic Pricing (others)	Fixed Rate (LayerCover)
Rate changes with utilisation	Rate is locked at purchase
Price slippage on large orders	No slippage - exact quote
Uncertainty on total cost	Deterministic cost upfront
Continuous rate feeding	Committed quotes with capital

Intent-Based OrderBook

The pricing system works like a Request for Quote (RFQ) marketplace:

Sell Intents

Underwriters post sell-side intents - committed offers to back a specific amount of coverage at a specific rate:

Field	Description	Example
`rate`	Annualised premium rate (basis points)	500 (5.00%)
`maxAmount`	Maximum coverage amount	$50,000
`duration`	Policy term in days	90
`poolId`	Target risk pool	1
`signature`	EIP-712 signed commitment	`0x...`

Matching

When a policyholder accepts a quote:

The IntentMatcher verifies both intents (buyer + seller)
Capital is locked immediately from the underwriter's pledge
A Policy NFT is minted to the buyer
The premium is collected and distributed

This is an atomic transaction - everything succeeds or nothing does.

Premium Formula

$P = \frac{C \times R \times D}{365 \times 10{,}000}$

Variable	Description
$P$	Premium (USDC)
$C$	Coverage amount (USDC)
$R$	Rate (basis points, e.g. 500 = 5%)
$D$	Duration (days)

Worked Example

Coverage: $10,000 · Rate: 500 bps (5%) · Duration: 90 days

$$P = \frac{10{,}000 \times 500 \times 90}{365 \times 10{,}000} = \frac{450{,}000{,}000}{3{,}650{,}000} = $123.29$$

You pay $123.29 for 90 days of $10,000 coverage.

Try It Yourself

🧮

Premium Calculator

Coverage Amount (USDC)

$1K – $100K

Rate (basis points)

5.0% APR

Duration (days)

$123.29

Total Premium

$1.37

Per Day

$10,000

Coverage

P = (10,000 × 500 × 90) / (365 × 10,000) = $123.29

Partial Fills

Intents support partial fills - a buyer can consume part of an underwriter's committed capacity:

Underwriter posts: $50,000 at 500bps
Buyer purchases:   $10,000 at 500bps

Remaining intent:  $40,000 at 500bps (still live)

This allows large intents to serve multiple buyers without re-posting.

Rate Competition

Multiple underwriters compete on the same pool. The OrderBook surfaces the best available rates, creating a competitive marketplace:

Pool #1 - Available Quotes:
├── Underwriter A: 450 bps ($25K capacity)  ← Best rate
├── Underwriter B: 500 bps ($50K capacity)
├── Underwriter C: 520 bps ($30K capacity)
└── Underwriter D: 600 bps ($100K capacity)

Buyers see all available quotes sorted by rate and can select the best option for their coverage needs.