Protect
Protect does not guarantee 100% safety. Protect is designed to mitigate risk for those who want it, but users are encouraged to understand the risks of using DeFi.
What Is It
Lulo Protect provides automated smart contract risk protection for deposits made into supported decentralized finance (DeFi) applications. This protection is built directly into deposit allocations and does not require a manual claims process.
Core Principles
Automated Coverage: Smart contract-enforced coverage means no manual intervention is needed to compensate for losses if a covered dApp experiences a failure.
Transparent & Hassle-Free: The protection mechanics are visible on-chain, removing the need for claim filing or reliance on off-chain approvals.
Flexible Deposit Choices: Users can choose between two deposit types—Protected Deposits (lower risk) or Boosted Deposits (higher yield).
What’s Covered
Covered Events: Smart contract exploits, oracle failures, and bad debt events that directly affect the integrated dApps.
Limitations: Does not protect against broader systemic risks (e.g., Solana network failures, USDC depegging) or failures within Lulo smart contracts themselves.
Fees
One-Time Initialization Fee: 0.005 SOL + transaction costs for the first deposit.
No Ongoing Fees: Aside from the initial setup fee, there are no recurring management or hidden costs.
How Protection Works
Coverage: In the event of a covered dApp failure, funds from the Boosted Deposits are used to make Protected Deposits whole.
Yield Flow: Protected Deposits earn stable lending yields, sharing a portion with Boosted Deposits. In return, Boosted Deposits take on the first-loss risk if something goes wrong.
Automated Balancing: The system monitors the ratio of Protected to Boosted Deposits. If needed, Lulo limits new Protected Deposits to maintain sufficient coverage.
Automated Balancing & Coverage Enforcement
Lulo regularly monitors the ratio of Protected to Boosted Deposits to ensure adequate coverage at all times. The protocol may:
Limit New Protected Deposits: Restrict incoming funds until enough Boosted Deposits are available to cover them.
Adjust Yields: Make Boosted Deposits more attractive so that more capital flows in to support coverage or vice versa.
This ensures that Lulo Protect remains sustainable and that the coverage promise to Protected Depositors holds.
Why Lulo Protect?
No Manual Claims: Coverage is integrated into the deposit mechanism, so there is no claim process.
Diversification: Deposits are spread across multiple protocols, reducing single-point-of-failure risk.
Peace of Mind: A set-and-forget approach for deposit protection in DeFi.
Last updated