Compensation Proposal for Cover and Ruler Protocols
It’s been 2 weeks since the Cover and Ruler team suddenly announced they decided to shut down their project. Collar Finance is planning to either take over or restart these projects, and has been preparing to do so since the shutdown announcement. We have submitted proposals on snapshot and have gotten some positive feedback.
Their remaining team posted their next steps (tweet here) but the compensation being offered is not comparable to the token holders’ loss of value caused by the shutdown. Collar Finance is an experienced development team with a deep understanding of the Ruler/Cover mechanisms due to our protocols’ similarities, and we are in the unique position of being able to leverage our own growing protocol’s synergistic potential with Ruler/Cover. Our project is still in its early stage, but as an offering of support to the Cover/Ruler communities we have decided to offer a percentage of our future governance token COLLAR to Cover/Ruler token holders.
COVER/RULER holders will be able to deposit their tokens in a pool to swap to the mock COLLAR token, and meanwhile hold their COVER/RULER position for up to 2 years. This means that they can withdraw their original assets at any time over the next 2 years as long as they repay the same amount of mock COLLAR they swapped from the pool.
This mechanism is designed for users who are undecided on selling their COVER/RULER, but who also want to lower risks of losing asset value by holding them. COVER and RULER holders are eligible for:
- Depositing COVER/RULER tokens to receive mock COLLAR tokens, with 1:1 conversion ratio.
- Retaining access to their COVER/RULER for future withdrawal.
- In the future, users will have two options when it comes to their deposited tokens：
1. Convert the borrowed mock COLLAR token to COLLAR after it is listed.
2. Swap back to their COVER or RULER.
Proposal Benefits to COVER and RULER Holders
Lower risk, low cost, and flexible options for all participants.
COVER/RULER holders have the right to swap to a newly launched token and are also allowed to withdraw the assets they deposit at any time. They incur few costs for the entire process. The swap process will only cost borrowers (i.e., COVER/RULER holders) a 0.01% nominal swap fee (cost in COVER/RULER). This fee is charged only for protocol security purposes.
An automatic, transparent, secure, process conducted via smart contracts.
The swap will be enabled by the Collar protocol. All transactions will be processed through smart contracts that have been fully open sourced and audited. All funds will be held in non-custodial pools.
No disruption to current circulating COVER/RULER tokens.
The issuers of mock Collar (Collar Finance) in exchange for COVER/RULER do not have access to the deposited COVER/RULER tokens since it is locked in the smart contract. Their tokens cannot be dumped on the market for profit. The lending of mock Collar for COVER/RULER does no harm to the current COVER/RULER secondary market.
Future of the Token Swap
Collar Finance has not yet launched the official Collar protocol or issued any COLLAR governance tokens yet. The two proposed compensation pools will be offered as a beta service available before the official launch of Collar. The mock COLLAR obtainable through this proposal represent shares of COLLAR tokens when it is officially launched, with the ratio determined at the time of launch. Any participant is free to convert their mock COLLAR or withdraw their RULER/COVER at any time within the 2 year duration of the compensation pools.
The compensation pools will be launched in the Collar DApp later this week. Holders of RULER/COVER who are interested in participating, please join Collar discord for more details, and look for the #cover-ruler-collar channel: https://discord.gg/WgXXBE2z .
About Collar Finance
Collar is a decentralized lending protocol that hedges pegged cryptoassets. By using Collar, users enjoy 100% LTV, no liquidations, protection against de-pegs, fixed interest rates with fixed term loans, no frozen assets, and it’s all oracle-free. Collar has recently completed testing on the testnet and the Collar Mainnet protocol will launch soon. Please stay tuned!