arShield: Armored Shield Vaults

Underwritten by Nexus Mutual

ArShield Armored Shield Vaults are covered storage vaults for yield-bearing tokens with auto-payments, powered by arCore. Users can deposit their yield-bearing tokens and enjoy dynamically adjusted collateral smart contract coverage. Cover fees are subtracted from token yield - that means you never have to pay manually or deposit funds up front.

There will be separate vaults to enable deposits of a myriad of tokens. Just like arNXM has done with (w)NXM, our vision is to convert a large part of ERC-20 Tokens into arTokens.

arTokens

Users who deposit "Tokens" into arShield vaults will be returned "arTokens". arTokens are evolved DeFi tokens that have 2 special properties:

1. Yield bearing

2. Covered against losses

arTokens offer a risk free method to guaranteed returns so long as the yield of the underlying protocol > fees paid for the cover.

arTokens can always be swapped back for the underlying tokens. Both the deposit of the LP tokens as well as the withdrawal of them incur a small cost, typically between 0.1% and 0.25%, depending on the stacked risk.

Shield Vaults

Shield Vaults provide full protection against smart contract risks up to a maximum total amount, determined by the collateral ratio.

This maximum payout is capped by the total cover available for the vault, which is distributed proportionally to all affected stakers (according to proof-of-loss) in the case of a hack.

• Cover type : Dynamically adjusted collateral ratio, currently max 50% (though this could be adjusted through a governance vote)

• Max Capacity : Unlimited

• Loss recovery : 100% up to max of Total Cover, distributed proportionally

• Multiplier: 1 (meaning costs based on 100% coverage would be the same as arCore costs; 50% coverage would be 50% of arCore costs etc)

• Deposit fee: 0.1-0.25%

• Withdrawal fee: 0.1-0.25%

Example:

For a Shield Vault with 10,000 ETH total cover available, the total capacity is uncapped. In the case of a hack, the maximum payout is capped and equal to the total cover capacity, to be distributed proportionally to all affected stakers according to proof-of-loss.

This means that in this example any hacks up to 10,000 ETH are fully covered. For any hacks above 10,000 ETH, the maximum payout is capped at 10,000 ETH since this is the total cover available. This 10,000 ETH will then be distributed to all affected stakers proportional to their loss. Said differently: Even if a protocol Shield has 50% collateral ratio, as long as the claimed amounts are less than or equal to the total cover available, all claims will be 100% paid. It is anticipated that this would cover most hacks, given they do not drain a larger amount of TVL compared to total cover sold (source).