Terms of Service

Terms and conditions governing your use of the LayerCover protocol and associated services

1. Agreement to Terms

By accessing or using the LayerCover protocol, website (layercover.com), documentation, SDK, or any associated smart contracts (collectively, the "Services"), you agree to be bound by these Terms of Service ("Terms"). If you do not agree to these Terms, do not use the Services.

"We," "us," or "LayerCover" refers to LayerCover Labs Ltd and its affiliates. "You" or "User" refers to any individual or entity accessing the Services.

2. Eligibility

You represent and warrant that:

1. You are at least 18 years of age (or the age of majority in your jurisdiction)
2. You have the legal capacity to enter into these Terms
3. You are not located in, incorporated in, or a citizen or resident of any Restricted Territory (see Section 10)
4. You are not subject to any sanctions administered by OFAC, the UN Security Council, the EU, or any other applicable governmental authority
5. Your use of the Services will not violate any applicable law or regulation

3. Description of Services

LayerCover is a decentralised on-chain cover protocol that facilitates:

• Policyholders purchasing cover for DeFi positions (stablecoin de-peg and vault share loss)
• Underwriters providing capital through Syndicates to back risk pools and earn premiums and yield
• Developers integrating cover functionality into third-party applications via the LayerCover SDK

The Services provide a user interface and developer tools for interacting with smart contracts deployed on supported blockchain networks. LayerCover does not take custody of your funds, execute transactions on your behalf, or act as a counterparty to any cover arrangement.

4. Smart Contract Interactions

4.1 Self-Custody

All interactions with LayerCover smart contracts are non-custodial. You retain sole control of your wallet, private keys, and digital assets at all times. LayerCover cannot reverse, cancel, or modify any blockchain transaction once submitted.

4.2 Transaction Finality

Blockchain transactions are irreversible once confirmed. You are solely responsible for verifying transaction details (amounts, addresses, gas fees) before signing.

4.3 Smart Contract Risk

Smart contracts are experimental software. While LayerCover aims to conduct thorough security audits and testing, no smart contract can be guaranteed to be free of vulnerabilities. You acknowledge and accept the inherent risks of interacting with smart contracts, including but not limited to:

• Undiscovered bugs or exploits
• Blockchain consensus failures or reorganisations
• Oracle malfunctions or manipulation
• Third-party protocol failures affecting integrated yield strategies

5. Cover Policies - Not Insurance

5.1 No Guarantee of Payout

Cover payouts are contingent on:

• Sufficient capital in the Capital Pool, Backstop Pool, and any applicable reinsurance arrangements
• Satisfaction of all claim conditions as defined by the relevant smart contracts
• Proper claim submission within required timeframes

5.2 Partial Payouts

If the payout waterfall (underwriter liquidity → private reinsurance when bound → backstop → protocol treasury) is exhausted before a claim is fully satisfied, the claim may be partially paid and the unpaid remainder can become claim debt. LayerCover does not guarantee full coverage under all circumstances.

5.3 Cooldown Period

New policies are subject to a 7-day cooldown period during which claims cannot be filed, as described in the policy documentation.

6. Underwriter Risks

If you participate as an underwriter (providing capital via Syndicates), you acknowledge:

1. Loss of Capital - Your deposited capital may be used to pay claims. For intent-backed policies, losses are charged first to the specific underwriter attached to the policy, and protocol fallback liquidity may be used if that underwriter-backed liquidity is insufficient
2. Illiquidity - Capital actively backing policies is locked until those policies expire or settle
3. No Guaranteed Returns - Past yields from premiums or DeFi strategies are not indicative of future performance
4. Salvage Rights - When claims are paid, underwriters receive distressed assets (salvage rights), which may have reduced or zero value

7. Fees

LayerCover may charge fees for certain Services, including but not limited to:

• Claim fees assessed on filed claims
• Protocol fees on premium flows
• Referral commissions as described in the Referral System

Fee structures are encoded in smart contracts and may be adjusted through governance processes. Current fee parameters are documented on the Parameters page.

8. Prohibited Uses

You agree not to use the Services to:

1. Violate any applicable law, regulation, or sanctions programme
2. Engage in market manipulation, wash trading, or fraudulent claim activity
3. Exploit smart contract vulnerabilities for personal gain (rather than responsibly disclosing them)
4. Circumvent access controls, rate limits, or security mechanisms
5. Use automated systems (bots, scripts) in a manner that degrades the Services for other users
6. Infringe upon any intellectual property or proprietary rights

9. Intellectual Property

All LayerCover intellectual property - including smart contract source code, SDK, frontend applications, brand assets, and documentation - remains the property of LayerCover Labs Ltd. Usage is governed by the applicable licence terms.

Documentation content is licensed under CC BY 4.0 and may be referenced with attribution. Smart contract source code is released under BUSL-1.1 and may not be deployed commercially without permission.

10. Restricted Territories

The Services are not available to persons or entities located in, incorporated in, or citizens or residents of:

• Countries subject to comprehensive US, EU, or UN sanctions (including but not limited to Cuba, Iran, North Korea, Syria, and the Crimea, Donetsk, and Luhansk regions of Ukraine)
• Any jurisdiction where the use of decentralised protocols or digital assets is prohibited by law

We reserve the right to restrict access from additional jurisdictions at any time.

11. Disclaimers

11.1 "As-Is" Basis

The Services are provided on an "AS-IS" and "AS-AVAILABLE" basis without warranties of any kind, whether express or implied, including but not limited to warranties of merchantability, fitness for a particular purpose, and non-infringement.

11.2 No Financial Advice

Nothing in the Services or documentation constitutes financial, investment, legal, or tax advice. You should consult your own professional advisors before making any financial decisions.

11.3 Third-Party Protocols

LayerCover integrates with third-party protocols (e.g., Aave, Compound) for yield generation. We do not control, endorse, or guarantee the performance of any third-party protocol.

12. Limitation of Liability

To the maximum extent permitted by applicable law, LayerCover Labs Ltd, its directors, employees, contractors, and affiliates shall not be liable for:

• Any indirect, incidental, special, consequential, or punitive damages
• Loss of profits, data, use, goodwill, or digital assets
• Any damages arising from your interaction with smart contracts, blockchain networks, or third-party protocols
• Any unauthorised access to or alteration of your transmissions or data

Our total aggregate liability for any claims arising from or related to the Services shall not exceed the amount of fees actually paid by you to LayerCover in the twelve (12) months preceding the claim.

13. Indemnification

You agree to indemnify, defend, and hold harmless LayerCover Labs Ltd and its affiliates from any claims, losses, damages, liabilities, and expenses (including legal fees) arising from:

• Your use of the Services
• Your violation of these Terms
• Your violation of any applicable law or regulation
• Any claim by a third party arising from your activities

14. Modifications

We reserve the right to modify these Terms at any time. Material changes will be communicated through the documentation site and/or protocol interface. Your continued use of the Services after such changes constitutes acceptance of the updated Terms.

15. Governing Law & Dispute Resolution

These Terms shall be governed by and construed in accordance with the laws of England and Wales, without regard to conflict of law principles. Any disputes shall be resolved through binding arbitration in London, United Kingdom, under the rules of the London Court of International Arbitration (LCIA).

16. Severability

If any provision of these Terms is found to be unlawful, void, or unenforceable, that provision shall be severed and shall not affect the validity and enforceability of the remaining provisions.

17. Contact

For questions about these Terms, contact legal@layercover.com.