Our Project Lead, Rupert, sat down with Akiba from CryptoSlate to Amulet and what the future looks like. Amulet is expected to launch on the mainnet in September and will be the first DeFi risk protection protocol built on Solana.
This interview covered a variety of topics so we have decided to turn it into a blog post for you. This article will allow you to rewatch the interview, while also the chance to use the transcript for your own reference.
TL;DR/TL;DW
- Amulet is launching in Q3 2022, initially on Solana, before moving onto other chains and Rust-based ecosystems.
- The project took shape at Solana Breakpoint in November 2021, recognising the huge opportunity for a cover protocol native to Solana.
- Solana outages do not concern us, being in risk protection, daily transactions will be far less than other industries
- Amulet will be offering Smart Contract Vulnerability cover initially
- Amulet will also offer stablecoin depeg coverage
- Since UST depeg, Amulet is looking at ways of working with other protocols to potentially put together an independent system for universal risk assessments. A “risk DAO” essentially.
- Staking on Amulet is different – Amulet takes that capital, puts it into a Solana proof of stake validator and that then generates a yield. That yield gets tokenized and used to pay out for claims.
- We will mint $AUWT and the user will be paid that out for the value of their claimable assets which can be converted for the expected amount.
- The bear market and launching during this period is Amulet’s opportunity to do things the right way.
Transcript – Please be aware that there will be some minor grammatical or spelling errors due to copying the words that are being spoken. We have done our best to rectify this and should have removed anything that is obviously incorrect.
Akiba – CryptoSlate
Hi guys, Akiba here from CryptoSlate. Today. I’ve got Rupert Buckfield from Amulet Protocol. How you doing Rupert?
Rupert – Amulet
I’m very good. How are you, man?
Akiba – CryptoSlate
Yeah, not too bad at all. So world of DeFi Cover. Kind of an interesting space right now with everything that’s going on. Um, Amulet’s not launched yet, I believe, is that correct?
Rupert – Amulet
That’s correct. Yeah, we’re launching in q3 this year. Yeah, especially well, specifically on Solana, but for the Rust ecosystem, we’re a multi chain solution.
Akiba – CryptoSlate
Oh, okay. So I was feeling that it was just Solana Based. So how’s that gonna work? Then it so you launch in a you’re going to be a Solana token, like, just give me a look? How does it kind of work? How does it all work?
Rupert – Amulet
Yeah. So I mean, given a little bit of background on the project as well. So we, we started back in November of last year. The team kind of came together and a few months before that we started in earnest actually at Solana breakpoint was really our like our first kind of foray out into the into the space. And we, you know, saw that there’s a huge opportunity on the Solana ecosystem in order to do a, a cover protocol dedicated to Solana. But equally, you know, especially over the last three weeks, I kind of know, our theory has been proved it like you shouldn’t necessarily tie yourself to one particular chain. So we’ve always had a very multi chain version. But that being said, Well, we’ve we’ve got our roots and our bases in Solana. And we’ve been supported by them, you know, the whole way through our journey so far. And as we look to grow from there,
Akiba – CryptoSlate
so will you be offering Solana outage cover?
Rupert – Amulet
I mean, that’s, yeah, that’s you and every other person asked me about, you know, how do you feel about the outages? In short, no, I mean, like, my personal feeling is that this has no real difference to if you go back to the early days of Etherium, like, we saw massive outages with crypto kitties being launched the DAO, you know, like, we saw the whole chain fall apart and come down so many times. So I’m not super concerned over the long run. I’m more concerned about the short term, and I suppose my short term is this year. And so as I look towards when our own launch happens, you know, how are we going to operate as a company? You know, if there are outages now, for us, it’s, it’s a lot easier, because you’re a pretty slow moving product, right? Being risk protection, there’s not too many transactions per day. Certainly not many claims and that sort of stuff. So we’re not expecting to have too much of an issue if there is another outage for like, 24 hours at a time. But it doesn’t, we need a little bit more confidence as a community that that that’s for sure, we need a little bit more supporting. And totally, if you’re listening, just give us another podcast.
Akiba – CryptoSlate
So what sort of products are you going to be offering them? Because I mean, in the world of DeFi cover, so it was quite interesting. I was doing my research on actually, personally, I think I managed to get out amazingly, of ust at 99.5. Well, I thought about getting cover instead. And I think at that point, the only thing that actually was the trigger for me was I looked to see what the cover price was for ust at that point. And it spiked to like something like eight or 13% Yeah, and when he looked at that, compared to everything else, I actually used the cover protocols as the indicator for me that I needed to get out and sell which I thought was an interesting also another use for it.
Rupert – Amulet
Yeah. I mean, so So in terms of our products, yeah, the the first one is smart contract risk. So that was really easy. You know, as soon as your capital is out of your hands, it’s at risk of being hacked or stolen from somebody else’s wallet or protocol while it states in there and so that’s that’s our kind of our bread and butter one now that comes with inherent risks as well in so far that, you know, there are multiple different ways that a protocol can be hacked and we can only, right now, we only provide the cover for the smart contract. So where you know Badger DAO was hacked last year and it was a front end hacked. And I think Nexus were protecting those guys. They ended up not paying out for that because it wasn’t something covered by that cover contract and that can damage to the relationship with your with your community because they bought it under the wrong pretences. The other cover that we will be doing is stable coin depeg as well but of course we’ll be looking at the way we do stable coin depeg cover with a lot more detail. Yeah, and it It’s a it is a major concern of mine, obviously, when we’re looking at protecting stake as assets. And we’ve actually got a really interesting way of the way we look after stake as assets, which I’ll come on to in a moment. But the we need to be really cognizant, not on the, the, I suppose the underlying risk of the asset, but also the team that have created that, you know, what’s come out over the last couple of weeks about some of the rumours some of its all proven about what Do was doing beforehand. And the fact that this is a bit of a pattern for him. I don’t want to go and comment too much on that. But my my concern is, and when I look at, when our team are looking at things, that we won’t have a full picture of information. So we’ve actually talked about and so slightly going off that a little bit of a track involving our community a lot more to do a lot more digging a lot more research for us before we list a product.
Akiba – CryptoSlate
Yeah, this kind of similar to what you’re talking about somewhat, I think it was more who it was actually, the gentleman from Ease, I think it might have been talking about doing like bug bounties for Yeah. claims and things.
Rupert – Amulet
We’re we’re going to do it in a slightly different way, just with in our own internal community. But yeah, listening to that, that spaces that we did the other day with Ease, Nexus, Bright and InsurAce. One of the things that came out of that was this idea of putting together a an independent system of people going out and reviewing protocols and generating a universal risk metric for that. Now, during that spaces, there are people that are for people that are against it. But my personal feeling is that I think it’s quite good idea and especially engages people. And I think if it’s independent from the providers, and it’s independent from these specific protocols, there’s going to be something that’s quite difficult to regulate, or at least you get a big enough volume of opinion around a specific subject that maybe that could work. I’m not sure. But in general, anything that highlights the risks involved with investing in something is, is really interesting to me and important for the industry.
Akiba – CryptoSlate Yeah, so I was gonna say some of the conversations around kind of a an independent body for ratings and search. And I was kind of feeling that, that starts to kind of put us back down the roads of like CeFi around kind of everything that happened with the subprime mortgages was quite a lot to do with ratings agencies. And there’s a lot of conversation around bias. And I think there’s a lot of risks there by going into an independent body that’s regulated as a centralised entity 100%.
Rupert – Amulet
And, and I think if we did something like that, it has to be done in a decentralised way. So essentially, it’s a risk protocol, whereby it is run and executed by its community, and the community that drives that information into it. And there’s some sort of special tool or mechanism that drives it is how it picks between those community members
Akiba – CryptoSlate
Risk Dao need to launch Risk Dao
Rupert – Amulet
Risk Dao, I mean, there’s actually so one of my previous companies was company called Pink, we actually started life being called the crypto crowd, which is how I got into crypto in the first place. But we use crowd wisdom to understand the value of an asset, and how that will change over time. Now. You know, crypto winter, we had to pivot to regulated assets. And that’s how we ended up being paying and being away a little bit removed from the crypto industry, but the principles are still exactly the same, you know, you get a big enough volume of people, you can get a really accurate answer just through crowd wisdom. And then what pink had developed was to analyse what which independent person or user or identity with inside that group was more accurate on a given time on a given day. And I think, you know, if you apply some of those mechanics around risk, Dow was, let’s call it, I think there was a really good way of potentially building that. But, you know, that’s, that’s something beyond that we have to work on. Yeah,
Akiba – CryptoSlate
no, definitely. So you talk about where you keep your capital. I think it’d be interesting to know so how does your system actually work? So if I if you’ve ensured a Depegging event and there is a Depegging event, where did where does the money come from to pay me back for my investment?
Rupert – Amulet
So it all works in one of the reasons why we’re on Solana is how as a part of our unique structure, so when you stake inside Amulet we take that state capital. And we put it into a Solana proof of stake validator, which generates a yield. And it’s that yield that we then use to, we tokenize it and we use that to pay out claims. So, principal capital is is protected, we have that layer of barrier plus other barriers in between which you can go into another time, or you can read the white paper, but the, essentially, you’ve got the barriers before state capital, which means when there’s a payout, what you’re risking as a staker is your yield and not your principal. Now, that means for users who are taking out cover policies, you’re always going to be paid out. And it’s that balance that we wanted to build, which you just, you can’t have in other DeFi risk protection platforms.
Akiba – CryptoSlate
So I’m guessing the risk there is that you get too many claims at the same time. So what So let’s say for argument’s sake, there’s an absolute catastrophe in the crypto space, and all of the money that has been generated through yield has been paid out what then happens?
Rupert – Amulet
Yeah, so this all comes down to our our risk metrics and how we build it in-house. So I want to clarify, this is exactly the same as all traditional cover as well. So if there was a catastrophic event, and a world of claims that would take out Aviva or another company like that. So typically, you know, the way in which we operate is when we start, we’re doing a one to two risk ratio. So that means for every dollar we have in our treasury, essentially, we can protect $2 worth of of policies on the other side. So let’s say we got $100 million in our treasury, we can cover $200 million worth of protocols on that site. Once we grow a little bit larger, once our state capacity gets a little bit bigger. Once we have more protocols, we will change that risk ratio over time. And if you look at somebody like Nexus, they’ve got to 1 to 20, we don’t think we’ll ever get to that stage just because we’re a little bit more risk averse as as a platform, but in the region of one to five or one to 10 that’s in the way that we’ll we’ll get to now. The likelihood of let’s say we had 10 protocols, and they’ve got $100 million. Each of them we’ve got $100 million in our, in our state capitol. The likelihood of them all being hacked at the same time is very, very small. But this is crypto, right. And we understand that that is a potential risk. So with Amulet the core differentiation is time as long as users hold the AUWT token, forgive me that we that we mint, to pay out users over time that AUWT token will be worth the value of which they have lost. Now initially, it’ll be worth, you know, some portion of what they have lost in this black swan event. I want to be very clear,
Akiba – CryptoSlate
Not a general rule.
Rupert – Amulet
No, the general rule is like you even short $100,000 You get paid out $100,000 worth of AUWT, you convert it out, you got your $100,000
Akiba – CryptoSlate
That’s really interesting, though, have you ever thought about offering a kind of a cheaper product that by default pays out slower?
Rupert – Amulet
That’s a very interesting thought. Um, no, in short, and this is the reason why we have these conversations, right? Because we want to gather as many
Akiba – CryptoSlate
Because I think that there will be someone that would be willing to pay a smaller, a smaller cost, knowing that okay, it is protected, but if I lose my 100 grand, I’m gonna get it back in instalments over 12 months, I pay less for the cover on that.
Rupert – Amulet
I mean, typically, our cover policies are around the 2% mark. Anyway, it depends on how complicated the and I’m really thinking about smart contract risk here at how complicated the policy is a big influx of people purchasing it because just like the UST depeg went way, way high up just before the depeg properly happened. That was the that’s because people many people were thinking like you they were thinking, I’m gonna buy this cover just in case shit hits the fan. And of course it did. So that’s why they the price had to go up in order to cover though
Akiba – CryptoSlate
Yeah, of course. Yeah. That’s why I use that as an indicator as like Well, if it’s like five times, and that was the I looked at USDT, which I know has always been higher than, say USDC in terms of prices, because of all the flood around it and etc, and people not being sure. And when I looked at it, it was yeah, it was like five times the premium for USDT. I was like, Yeah, I’m out.
Rupert – Amulet
Yeah, I mean, like it. It’s a super unfortunate event. Yeah, many people will say, it was it was, it was bound to happen. And we were all just, you know, living off the, you know, the proceeds of whatever dough could raise. Yeah, there’s, there’s a whole bunch of arguments to say it was all rigged in the first place, it was always going to happen like that. There’s so much kind of hearsay around it. But the one thing is true as damaged us as entire industry right now. And it’s all we can ever talk about for the next six months.
Akiba – CryptoSlate
Well, that was the thing I was going to I was kind of interested to ask you in that. How does it feel to be part of probably the only part of the crypto space that could arguably be said to be a winner out of this? Because there is an argument for that in that? There is definitely it’s probably one of the biggest use cases that will be on every day for cover website, talking about what would have happened if you had this cover during the Terra crisis?
Rupert – Amulet
Yeah, I mean, it’s a good, it’s a good show. I think, for me as a new protocol in the space, where you, in broad strokes, Terra should have been seen as a real shining light, right. And they have been like, for a long time, a lot of people bought into a lot of really smart funds. You know, I read that post from Delphi the other day about, you know, their total exposure to, to, which actually wasn’t huge, but the returns are so big, ended up being, you know, a sizable chunk of their portfolio. And you look at, you know, firms like that, and you do think of whether they’re really smart, and they know what they’re doing. And so we’re going to kind of FOMO and follow them, right. So in terms of like being a new protocol in the space, and being caught in the Melly, I’m not super happy about it, if, if I must be brutally honest. But being a cover protocol at this time, like I’ve always said that cover is great for a bear market. I mean, it just works. And people are more risk averse. And, look, it’s not just a bear market for crypto that we’re looking at right now. We’re looking at a bear market for all markets. And and beyond. And I think having a cover protocol is a is a huge advantage. To do that, because we’re going to see people in traditional world looking for yield elsewhere. And they’ve already kind of heard about crypto, they know about crypto, they they’ve seen the Terra stuff and maybe gone while look, there’s clearly some massive risks that I don’t understand. What can I do to protect ourselves and all of our inflow right now all of our work and like we’re not live and said it took you three, but we have tonnes of people contacting us right now. And that’s all about wanting cover everybody wanting cover in the space. So we’ve got, as we go live in Q3, we’ve got around a billion dollars worth of policy cover that we’ve got to underwrite. And that’s my biggest challenge right now is, is finding that stake in capital in order to underwrite it.
Akiba – CryptoSlate
Wow. I mean, interesting place to be. I mean, I think I was gonna say is, like, the bear market. Specifically, how does it feel launching into a bear market? Do you feel more ease because of it? Or?
Rupert – Amulet
Well, I mean, obviously, you know, I’m quite I’ve grown the beard for it, you know, I I’m actually looking, I’m really looking forward to it. Now. We were lucky we got our raise in and there won’t be so so many other protocols and founders out there that would have done that. And raising in a bear market is really, really tough. And I’ve done that before as a Tradfi founder, founder. And it’s it’s a really tough experience and but it also helps you build knowledge about how to do the process. Anyway, we were lucky we got our funding, we’re in a really strong position, which means that we can get our heads down and we can build and we can just grow on that ready for the next bull market. And you’ll if you look at people like Nexus, they had exactly the same sort of timeline that yeah, Nexus started out in 2017. Just before the crypto winter and they hit straight on into that. And they’ve done an excellent job. And I’m really proud of using them as like kind of a leading light of the DeFi cover sector. Albeit, it’s still very small. And we’ve got a huge opportunity to kind of grow into and I think, you know, this is gonna drive huge adoption. I hope this drives huge adoption. That’s my, not only from a business standpoint, but from just my ethical standpoint of people wanting to protect themselves.
Akiba – CryptoSlate
Now, definitely. And I think it’s a it’s a great way of getting people to feel a little bit safer with things that they maybe don’t quite understand. Have you ever thought about cover protecting other risk protection protocols, smart contracts?
Rupert – Amulet
Yes, 100%. And in fact, that that’s one of the things we are going to be doing a little bit later down the line when we were grown a little bit bigger. But we’re a big fan of reinsurance. We’re a big fan of, of cross chain and reinsurance as well, whereby we utilise, you know, a lot of our state assets which are in the slonem ecosystem, or at least right now, or initially when we start and using that reinsure a protocol over Etherium ecosystem. And that will be definitely something that we do in the future when it comes out. I’m not entirely sure. I would hope that we get to the, towards the end of q4 this year.
Akiba – CryptoSlate
Really interesting. Looking forward to it. So what’s the website? Where can people find out more?
Rupert – Amulet
Amulet.org, head over there, join the discord. Ask us a whole bunch of questions. Get involved. And yeah, let’s make crypto a little bit safer.
Akiba – CryptoSlate
Brilliant, right before you go. I’ve got a new segment I’m going to try out with you. You’ve given no prep to this. It’s truly organic. It’s called Shill or Fill. Okay. Okay. Okay. So your quest, if you choose to accept it, which you have to do is you can either Shill another project that you believe in for at least 20 seconds, so I’ll talk about something else, or fill the dead air time with awkward silence for 60 seconds. Talking about something non crypto related that no one’s gonna be interested with.
Rupert – Amulet
I have a terrifying fear of awkward silences. So I’m going to Shill Okay, I’m gonna highlight out my buddy’s company, which is okay, go. Okay, so Altitude, is a product that helps you take your crypto loans and flip them for better rates around the industry, and it doe that automatically goes bang bang bang. And if you’re a loan, staking partner or loaner on there, it will also get you the best returns. That’s Altitude.
Akiba – CryptoSlate
boom, 20 seconds and eight 20.8 seconds. Almost perfect.
Rupert – Amulet
That was no no practice or prep. Right. So what the website is, I can’t tell you what it is. But keep an eye on the Twitter’s.
Akiba – CryptoSlate
I’ll try to dig it out and maybe put up on the screen for the video. Rupert, it’s been an absolute pleasure, I’m sure we’ll chat and meet again. And I’m really fascinated with what you guys are doing in the space and just DeFi cover in general. I mean, it sounds kind of a bit dry to some people maybe but I think I’m on your side here that anything we can do to help make adoption easier for people outside of the space. It sounds good with me.
Rupert – Amulet
Likewise, thanks
Akiba – CryptoSlate
Good Cheers