Amulet Protocol deployed our most recent product, TNT Vaults, to the public in July 2023. TNT (Trigger-no-Trigger) Vaults were introduced due to multiple requests and suggestions from our community to introduce a form of stablecoin depeg cover.
Since the catastrophic events of the LUNA/TERRA collapse and subsequent depeg of UST in May 2022, demand for such product increased as DeFi users looked for further protection of their assets.
Although this incident occurred before Amulet was live, other risk protection protocols, such as InsurAce offered depeg cover for UST and provided a use-case for success after paying out $12m to affected users.
After multiple discussions and diligence from our team, we launched our stablecoin cover in the form of TNT Vaults. After some feedback from the AmuNation (our community), we’ve decided to create this blog to help users understand the product more and also take advantage of our TNT Vaults.
Understanding TNT Vaults:
Users can use our TNT Vaults in two ways. They can either purchase cover to protect their stablecoin against dropping to the trigger price or they can underwrite to earn rewards for having confidence in the stablecoin performance.
TNT Vaults provide users with a risk-hedging marketplace. Users will choose “Purchase” or “Underwrite” based on their confidence in the price of the stablecoin:
Purchase: Users can purchase depeg cover and receive a pay-out/compensation in the event of a trigger (e.g. USDC/T depegs from $1)
Underwrite: Users can stake capital into our vaults and take the risk in the event of a trigger (e.g. USDC/T depegs from $1).
If users feel that during the lock period that the stablecoin could drop below our trigger price set during that time, those who purchase will receive their payout as they have purchased stabelcoin depeg cover similarly to how they would purchase smart contract cover.
Users who purchase pay their premium for the cover and can have peace of mind. If the price does not drop below the trigger price during the lock period, no event will be triggered and users will not receive a payout. If the price does drop, an event is triggered and payouts would commence.
If users feel confident during the lock period that the stablecoin won’t drop below the trigger price, they should look to underwrite a vault. Underwriting Vaults is your opportunity to make money and earn ROI by hedging the risk that an event wouldn’t occur during the lock period.
Users who underwrite will initially pay their stake and provide the capacity for users to purchase depeg cover. These users can stake as much as they wish with confidence that should the price stay stable, they’ll be entitled to rewards and a payout themselves.
With Vault locking periods only lasting 5 days, underwriters have a high possibility of earning a return as you would expect the risk to be lower if market conditions are normal. Underwriting provides a unique opportunity for users to underwrite quick policies and receive rewards quickly should no trigger events occur.
Vaults Tab on MainNet: Trade, Locked Periods, Funding Rounds
We’re working hard behind the scenes to fix certain issues with our UI/UX and to make our products easier for users to understand.
We understand that there may be confusion about the Vaults tab and this section should help you comprehend the section clearer.
When signing into the Vaults page, you’re met with this screen:
We launched our TNT Vaults initially with 2 stable coins – USDC and USDT. These are two incredibly popular stablecoins for our industry and we’re still in discussions regarding adding others in due course.
As of today, to stake or purchase USDT depeg cover, you’d pay in USDC and vice versa. The reason for this is due to the TNT Vaults being your opportunity to make money based on risk. If users believe USDT will hit the trigger price, they’d expect a payout in USDC as this stablecoin hasn’t depegged. This is the reason why you use the opposite stablecoin for your activity as in essence, you are betting on the other stablecoins performance.
Vaults can be funded 7 days a week but each cover period/vault locking period lasts 5 days. The lock periods will be every Wednesday until Monday. Once locked, users will need to wait for the period to end to know the result.
If in these 5 days, a trigger event happens. Purchasers will receive their payout. If no trigger event happens, Underwriters will earn rewards and ROI based on the amount they staked.
Once Vaults go into the locked period, they can be found under the “All Covers” tab.
This is where users can find out the status of all vaults. This is updated with the last known price, the trigger price set for a depeg event, the period of which they are locked and the results after the period ends.
In the example above, the first 4 Vaults will have a result on 7th August 2023. The bottom two vaults for USDC lock period have ended and USDC did not drop below $0.9956 or $0.9789 and therefore an event was not triggered.
As an event was not triggered, users who purchased cover have no further actions. Their assets were protected and if they want to purchase more cover they can in the next funding round. Users who contributed by underwriting into those vaults will automatically receive their ROI and returns for these vaults.
The My Covers tab will show the Vaults that users have specifically contributed to.
FAQs about Vaults:
What classifies a Trigger Price?
Trigger Prices are clearly stated on each Vault. For a Vault to be triggered, the price must go below the Trigger Price set on the Vault. If they have two prices (e.g. $0.9956 or $0.9789, the risk will be different and therefore the payout or ROI will reflect this.
How do I know what my payout/ROI will be?
Regardless of whether the user is a purchaser or underwriter, when going through the process, our app will clearly state the expected payout or ROI based on the amount you wish to hedge from your wallet.
Do you have a step-by-step user guide?
Indeed, this can be found here. Our team is also. always available should you get stuck.
Where can I find the terms and conditions of your stablecoin depeg cover?
Our cover wording with full terms and conditions for depeg cover can be accessed here.
How often can I fund Vaults?
Vaults will be live to fund 7 days a week but each vault locking period is 5 days. The lock periods last from Wednesday until Monday but users can still fund the next lock period on Mondays and Tuesdays.
How do I explain TNT Vaults in the shortest, non-technical language?
Our TNT Vaults are user’s opportunity to either protect their assets or earn ROI by providing other users the opportunity to secure their stablecoins against specific price fluctuations. Users are betting on their confidence of stablecoin performance, if they think there is a risk, they purchase cover. If they don’t think there is a risk and they want to make money, they underwrite. For example, if you are a user who believes USDT has no chance of hitting the trigger price, you could make ROI each week by underwriting into the vaults.
Where can I get more help?
As always, Discord is our main hub for conversation – discord.gg/AmuletProtocol