Mutually Covered

This project aims to aggregate different governance tokens of protocols looking to protect themselves from smart contract hacks risks and operating risks. The governance tokens are aggregated in an index token generated through the tokenset smart contracts. Stakers can convert their governance tokens for the index token, that we call MTC. The MTC index token price is a weighted average of the underline governance tokens price. The MTC index token is then deposited in a Liquidity pool that act as a backup capital to cover the risks of each protocol.

Protocols will pay a premium on a daily basis, either from their own treasury or from giving a small portion of their revenue. The premium will be collected automatically leveraging the Autonomy set of smart contract. The premium is calculated using: -the maximum payout of the protocol can receive -the loss probability of a hack calculated using the dataset of DeFi Safety

The premium is sent to the TokenSet vault and converted to MTC token. The MTC token is sent to the Liquidity Pool that automatically generates a policy and locks the capital of the Stakers.

The Stakers get an interest rate from their deposit, coming from the premiums of each of the protocols. The interest rate is under the form of MTC token. The process of the distribution of the interest rate mirrors the AAVE a-tokens.

If there is a hack, the protocol that received the damage, sends an input to the governance of the Mutual that starts a policy trigger process. This process can be either automatic or can leverage the court mechanism of the Kleros system. The automatic trigger is shown in our demo. Each protocol will have its own automated algorithm. For Compound, the cToken has an exchange rate against the underlying token, and its exchange rate will increase over time. If the exchange rate decreases instead, this would mean the amount of underlying tokens staked in the liquidity pool is missing, which implicates a hack or a failure in liquidation process. Calculation using the decrease in the exchange rate will enable automated payments. In the case the evaluation and trigger is performed by Kleros, the court will be composed of third party evaluator that will perform the analysis and trigger the smart contract.

Stakers can withdraw their funds by sending a withdrawal transaction to the liquidity pool smart contract and collect MTC that can be burned in the TokenSet vault to collect the underline protocols tokens.

Detecting an anomaly on a lending pool smart contract for Compound was created by an off chain code. The coding was done by Typescript. We used a websocket to receive signals when a block was created in Ethereum, and hit the exchangeRateCurrent function of the cToken smart contract. An anomaly would be detected if the last exchangeRateCurrent was larger than the present exchangeRateCurrent.