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I've been accumulating $COVER / @CoverProtocol since the token re-release in January and it's now one of my biggest mid-cap bets
TLDR:
- Better features and composability than NXM
- Priced just for just the yearn integration
- V2, staking, and more coming
Thread
TLDR:
- Better features and composability than NXM
- Priced just for just the yearn integration
- V2, staking, and more coming
Thread
We've now seen exploits of yearn, alpha, farm, pickle, sushi, etc.
It's clear that these contracts can be extremely lucrative, but also dangerous
Having insurance is a key part of any strategy - especially as we bring in bigger institutional dollars
It's clear that these contracts can be extremely lucrative, but also dangerous
Having insurance is a key part of any strategy - especially as we bring in bigger institutional dollars
The leading player is nexus, with a $400M cap. I would say cover is the only competitor to nexus and it's still sub $100M
This alone isn't a reason to say "cover should be a 4x" - it's just gives evidence that insurance products can be priced there
This alone isn't a reason to say "cover should be a 4x" - it's just gives evidence that insurance products can be priced there
But, I also think Cover has some unique qualities that make me more inclined to buy coverage from them over nexus:
1) Liquid insurance: with nexus I have to pre-commit to a coverage length, with cover the claim is liquid and I can sell my coverage when I don't need it anymore
1) Liquid insurance: with nexus I have to pre-commit to a coverage length, with cover the claim is liquid and I can sell my coverage when I don't need it anymore
It's useful because often I use a contract anticipating a high yield, but then others start using it and the yield drops.
If I bought coverage on nexus I'd be screwed, but with cover I can sell the coverage when I leave the contract in just a few clicks
If I bought coverage on nexus I'd be screwed, but with cover I can sell the coverage when I leave the contract in just a few clicks
2) KYC: Doesn't require much explaining - to use nexus you need to give them your ID, register wallets, etc.
Anyone can use cover - just buy claim tokens!
Anyone can use cover - just buy claim tokens!
3) Priced in stables: IIRC with nexus I have to buy x ETH of coverage, but I'm a heavy stables farmer so I want to buy x dollars of coverage. I don't want it fluctuating with ETH prices
4) Proof of loss: Using nexus is frustrating because you may not get covered from a hack, you have to -prove- it. So only those that are in the contracts that got hacked get covered. With cover I can insure myself however I want.
Holding $CREAM and want to protect downside due to a hack? just buy cream claim tokens on cover! You don't even need to be using the contract - this opens a world of possibilities
Outside of features, the yearn partnership is lucrative and most haven't realized yet
Yearn is serious about this, it's even in the header of their new site:
Yearn is serious about this, it's even in the header of their new site:
The yearn team has said that all vault entrances will -automatically- buy cover, and it will be an opt out (not opt in) experience
There is currently $500M in the vaults: https://defipulse.com/yearn.finance
There is currently $500M in the vaults: https://defipulse.com/yearn.finance
If cover takes 0.1% fees on minting that's 500k revenue per half (if avg cover contract is 6 months) it's already $1M ARR from just 1 protocol, assuming 0 growth
Now add their other protocol users they already have: badger, curve, sushi, rari, etc.
Now add their other protocol users they already have: badger, curve, sushi, rari, etc.
The median public SaaS company trades at 11x ARR, for smaller fast growing products a 20x multiple is usually fair in venture land
With a current $60M cap, $COVER is trading like it's only going to do $3M ARR....
With a current $60M cap, $COVER is trading like it's only going to do $3M ARR....
The best bets are the ones that you can buy for the value of what their current product offers
You're basically buying the business for free, and anything new they add is upside
Cover fits this narrative perfectly because the pipeline is glorious:
You're basically buying the business for free, and anything new they add is upside
Cover fits this narrative perfectly because the pipeline is glorious:
1) Staked cover: https://twitter.com/chefcoverage/status/1352686218950172675
Basically $COVER holders can stake their cover and get fees from the protocol
I see this like a dividend on-top of price appreciation - exactly like staked sushi, and we all know how well that played out
Basically $COVER holders can stake their cover and get fees from the protocol
I see this like a dividend on-top of price appreciation - exactly like staked sushi, and we all know how well that played out
2) Flash swaps: https://twitter.com/chefcoverage/status/1357041922825674754
Liquidity for claim / no claim tokens is probably the biggest remaining problem for cover, team is clearly solving it
Liquidity for claim / no claim tokens is probably the biggest remaining problem for cover, team is clearly solving it
3) Order book style exchange for CLAIM / NO CLAIM
4) The team hasn't said this yet but just using the tech for CLAIM / NO_CLAIM seems unlikely
They've effectively made a liquid betting market on smart contract failure - why cant this be extracted to anything?
TRUMP_WIN / TRUMP_LOSE
SNOW_IN_CANADA / NO_SNOW
etc.
They've effectively made a liquid betting market on smart contract failure - why cant this be extracted to anything?
TRUMP_WIN / TRUMP_LOSE
SNOW_IN_CANADA / NO_SNOW
etc.
5) Notice how new protocols have yDAI as collateral in cover?
Coverage providers aren't just getting trading fees and mining rewards, but their collateral is earning extra yield in the yearn vaults
How much more could they do w the collateral?
Coverage providers aren't just getting trading fees and mining rewards, but their collateral is earning extra yield in the yearn vaults
How much more could they do w the collateral?
On top of all this - by buying cover you also get 100% APY as a ETH/COVER LP in SushiSwap
And the cover farm isn't onsen, it's on the -permanent- menu...
And the cover farm isn't onsen, it's on the -permanent- menu...
Finally on price - I think it hasn't gone nuts like the other defi mid caps (SFI, RGT, FARM, etc.) because of the old infinite mint bug
Lots of the supply is still on Binance, but with time it's getting drawn off and I think it will accelerate when staked cover launches
Lots of the supply is still on Binance, but with time it's getting drawn off and I think it will accelerate when staked cover launches
tacking this onto the end too: https://twitter.com/dcfgod/status/1360766855791566852
