[Temp Check] A Union Safety Module

Title: [TEMP CHECK] A Union Safety Module.
Date: 2024-05-17

The primary risk to users of defi protocols like Union is smart contract risk: Risk of a bug, design flaw or potential attack surfacing on the smart contract layer which could lead to loss of funds.

A safety module is a dedicated pool of funds reserved to pay out in the event of such an unexpected loss of funds. The largest and most well known safety module being the one operated by AAVE.

Cozy Finance, an insurance markets protocol, has recently developed a saftey module product(you can read about it here: https://csm-docs.cozy.finance/). And has made it available for Union DAO.

We propose the creation of a Union Safety Module that anyone can interact with and help secure the protocol by locking an Asset (80:20 UNION-wstETH BPT in this case) into the Safety Module contract.

Proposed Initial Config

UIP DRAFT: UIP15: Union Safety Module by maxweng · Pull Request #24 · unioncredit/UIPs · GitHub


FAQ (drop any questions below)

  • Who handles payouts? UNION governance
  • What if there’s insufficient funds? up to governance,
  • What if someone defaults on me, is that covered? no, thats not a smart contract hack, that’s how credit works.
  • Will I be able to vote my UNION if they’re staked in the Safety Module? No, the dao would need to upgrade it’s governor to support that.

Next Steps:

  • If there’s no objections this will progress to a full proposal in 3 days, and then another 2 days of review before being put up for vote.
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Update: Cozy is redeploying their Safety Module protocol under an open source license :saluting_face: This will be put forward as a full proposal soon as they finish their deployment.