YieldGuard

Problem Statement

This platform creates a risk-sharing ecosystem where users can choose between protected yields or higher-risk, higher-reward strategies through an innovative insurance mechanism.Two Pool Types Safe Pools - Protected Yield Strategy What it is: Deposit directly into high-yield DeFi protocols with full insurance protection Yield: Base protocol APY minus insurance premium (~5%) Protection: 100% refund if the protocol gets "hacked" Example: Peapods Finance at 25% APY → User earns 20% APY with full protection Boosted Pools - Insurance Provider Strategy What it is: Deposit into stable, low-yield protocols while providing insurance to Safe Pool users Base yield: ~4% APY from top-10 TVL protocols Insurance premiums: Earn premiums from each protocol you choose to insure Risk: Must compensate Safe Pool users if insured protocols failHow the Insurance Mechanism Works Single Protocol Insurance Boosted Pool User: • Deposits $1,000 in stable protocol (4% APY) • Chooses to insure Peapods Finance (+5% premium) • Total APY: 4% + 5% = 9% • Risk: Must refund Safe Pool users if Peapods failsCumulative Insurance Strategy Boosted Pool users can insure multiple protocols simultaneously for exponentially higher yields: Base Protocol: 4%Peapods Insurance: +8%Notional Insurance: +15%Flare Insurance: +5%Wombex Insurance: +30% ───────────────────────── Total APY: 62%The Trade-off: Higher yields come with compounding risk - if any insured protocol fails, you must pay out claims.Hack Definition & Triggers A protocol is considered "hacked" when its total value locked (TVL) drops 5-10% from its all-time high, triggering insurance payouts.Risk Management Features Insurance Buffer Requirements Platform maintains extra TVL buffer to handle multiple simultaneous failures Example: If $10M total insurance TVL covers $2M in Peapods exposure, the system ensures enough remaining funds ($8M) to cover additional potential hacks Dynamic APY Calculation Boosted Pool APYs adjust automatically based on: Total platform TVL Distribution across protocols Current risk exposure levels Auto-Exit Protection Safe Pools automatically exit positions when insurance costs exceed base yields, preventing negative returns.Economic Incentives For Safe Pool Users Lower but guaranteed yields with full downside protection Peace of mind - no loss of principal even if protocols fail Automatic risk management through auto-exit features For Boosted Pool Users Significantly higher potential yields through insurance premium collection Diversified income streams from multiple protocol insurance Calculated risk exposure with transparent payout obligationsPlatform Value Proposition This creates a sustainable yield ecosystem where: Risk-averse users get protected exposure to high-yield DeFi Risk-tolerant users earn premium income while providing valuable insurance services Market efficiency is improved through better risk pricing and distribution The platform essentially functions as a decentralized insurance company where users can be either policyholders (Safe Pools) or insurance providers (Boosted Pools), with yields and risks balanced accordingly.

Solution

Person 1: LayerZero SetupClone LayerZero V2 OApp templateSet up development environment (Hardhat)Create InsuranceCore.sol skeletonInitialize cross-chain configuration (ETH, ARB, BASE)Person 2: Oracle & Payment SetupSet up Chainlink development environmentInitialize Circle SDK projectResearch Chainlink price feeds for target protocolsSet up CCTP testnet configurationPerson 3: Frontend SetupCreate React app with Web3 integrationSet up wallet connection (MetaMask/WalletConnect)Design basic UI mockups (3 key pages)Install dependencies (ethers, @layerzerolabs/ui-kit)Person 4: Infrastructure SetupCreate GitHub repo with proper structureSet up deployment scripts for 3 chainsCreate documentation templatesSet up screen recording tools for demo