9.4 Back Asset Custody

In InsuranceDAO.World, the Arrow (ARR) and arrUSD tokens serve as the pillars of the platform’s decentralized insurance ecosystem, providing governance, staking, premium payments, and claims processing. To ensure that the arrUSD stablecoin retains its stability and reliability, it is backed by SOL (Solana) as the collateral asset, with a collateralization ratio of 125%. This collateral model ensures that arrUSD maintains its value while providing users with a predictable and secure transaction medium for premium payments and claims disbursements.

Key Highlights:

1. Arrow (ARR) Token:

• Governance: ARR tokens enable users to participate in decentralized governance, influencing key decisions on platform upgrades, risk parameters, and the addition of new Verified Nodes.

• Staking: Users can stake ARR tokens to participate in insurance pools, earn rewards from premium payments, and gain voting power in the DAO.

2. arrUSD Token:

• Stablecoin: arrUSD is designed for stable, predictable payments of premiums and claims across the platform. Unlike traditional fiat-backed stablecoins, arrUSD is synthetically backed by SOL with a collateral ratio of 125%.

• Collateralization: This means that for every 1 arrUSD issued, 1.25 SOL is held as collateral. This ensures that arrUSD retains its value even in volatile market conditions, providing reliable and stable transactions.

• Premium Payments and Claims: arrUSD is used for premium payments and claims disbursements within the platform. Its value stability ensures that insurance products are priced accurately and paid out consistently.

Why SOL Collateralization?

The decision to use SOL as collateral provides the platform with several benefits:

• Solana’s Speed and Efficiency: SOL is a high-performance blockchain, ensuring that transactions and collateral management are executed efficiently with low transaction fees and fast confirmation times.

• Security: With a 125% collateralization ratio, the platform offers a buffer against potential price volatility, ensuring that the collateral always exceeds the value of arrUSD in circulation.

• Decentralization and Transparency: The collateral model ensures that arrUSD is fully decentralized, with the ability for participants to verify collateral at any time. This adds an additional layer of transparency and security to the system.

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Arrow (ARR) and arrUSD are integral to the InsuranceDAO.World platform, enabling decentralized governance and insurance coverage. The ARR token provides community control and rewards, while the arrUSD stablecoin offers a secure, reliable payment method for premiums and claims. By using SOL as collateral with a 125% collateralization ratio, arrUSD maintains its stability and ensures that the insurance platform can function smoothly without exposure to volatility risks.

This collateralized structure not only guarantees the stability of arrUSD, but it also ensures risk management within the platform, creating a robust and secure decentralized insurance environment for all participants.