EDMA Liquidity & Insurance — LP Rewards and Coverage Pool
Two-part DeFi layer covering liquidity provision rewards and protocol insurance. Four LP pool types (marketplace concentrated pairs, lending utilization-based, structured product secondary market, FX corridor) pay LPs from protocol fee streams. The insurance pool funds from attestor payout haircuts, slashing proceeds, and liquidation fees; covers mis-attestations, oracle failures, and in-scope contract bugs with per-incident caps.
≈ 4 min read · 4 sections
4 LP pool typesMarketplace, lending, structured, FX
3-15% LP APYRange across pool types
$500K-$5M capsPer-incident insurance coverage
What this page covers
EDMA's liquidity and insurance layer has two complementary parts. Liquidity provision rewards LPs who supply capital to four distinct pool types: marketplace concentrated pairs, lending pool, structured product secondary markets, and FX off-ramp corridors. Each pool pays from a different revenue source (trading fees, lending spread, secondary spread, off-ramp spread) and offers a different risk-return profile.
Insurance backstops mis-attestations, oracle failures, and in-scope contract bugs through a pool funded by attestor payout haircuts, slashing proceeds, and liquidation fees. Coverage is bounded by per-incident caps and processed through the dispute resolution module with veEDM-weighted panels reviewing claims. The two parts compose: LP capital provides protocol liquidity; insurance provides risk coverage that makes LP participation safer.
FOUR POOL TYPES, COMPOSABLE LIQUIDITY
Liquidity providers earn rewards by supplying capital to four distinct pool types on EDMA. Each pool serves a specific protocol function and pays LPs from a different revenue source: trading fees, lending spread, structured-product secondary market spread, or FX corridor spread.
P1
Marketplace LPConcentrated pairs, trading fees
LPs deposit pairs (Energy NFT vs $EDSD, Carbon NFT vs $EDSD, $CLE vs $EDSD) to provide depth for marketplace trading. Concentrated liquidity ranges similar to Uniswap V3 mechanics; LP fees route from the certificate trading fee on each trade. Typical LP APY 3-8 percent depending on pool depth and trading volume; high-volume corridors approach 12 percent.
P2
Lending LP$EDSD supply, utilization-based APY
LPs supply $EDSD to the lending pool from which borrowers draw against collateral. Lending APY tracks pool utilization through a standard kinked curve: 3-5 percent below 80 percent utilization, steepens to 8+ percent above 80 percent to attract additional supply. Withdrawals are subject to available liquidity; utilization spikes can temporarily reduce withdrawal availability.
LPs provide secondary market depth for tokenized green bonds, energy production tranches, and carbon forward contracts. The pool captures bid-ask spread on every secondary trade. APY varies widely by product (5-15 percent typical) because spreads correlate with product complexity and remaining duration. Best returns come from concentrating in newly-issued mature products with strong primary demand.
P4
FX corridor LPOff-ramp spread, currency pair
LPs supply $EDSD and corresponding fiat-backed stablecoins to off-ramp corridors. Each corridor (USD, EUR, GBP, JPY, etc.) has its own LP pool; LPs capture a share of the 25-40 bps off-ramp spread. Lower-volume corridors offer higher LP yield because thinner depth requires more LP compensation; major corridors yield 4-6 percent, emerging corridors 8-12 percent.
All four pool types share a common reward mechanism: a share of the protocol revenue flowing through that pool's function distributes pro-rata to LPs. Withdrawals are unrestricted (subject to available liquidity); LPs can rotate between pools based on yield and personal risk preference. Pool risk is operational rather than principal: impermanent loss applies to concentrated pairs (P1, P3, P4) but not to single-asset deposits (P2).
Four LP pool types serving distinct protocol functions. Marketplace LP (P1, concentrated pairs for trading depth), Lending LP (P2, $EDSD supply with utilization-based APY), Structured product LP (P3, secondary market spread capture on bonds and tranches), FX corridor LP (P4, off-ramp spread on currency pairs). APY ranges and risk profiles differ by pool.
LP returns and risk by pool type
Marketplace LP (P1) uses concentrated liquidity ranges similar to Uniswap V3. LPs deposit pairs (Energy NFT vs $EDSD, etc.) within a chosen price range and earn from trading fees on transactions that fall in their range. APY 3-8 percent typical, up to 12 percent in high-volume corridors. Risk: impermanent loss when price moves outside the LP's range plus protocol smart contract risk.
Lending LP (P2) supplies $EDSD to the borrowing pool. APY tracks utilization through a standard kinked curve: 3-5 percent below 80 percent utilization, 8+ percent above. Risk: bad-debt exposure if liquidations under-recover (mitigated by 5 percent of liquidation fees flowing to insurance pool) plus smart contract risk. No impermanent loss because it's a single-asset deposit.
Structured product LP (P3) provides depth on secondary markets for tokenized green bonds, tranches, and forwards. APY 5-15 percent depending on product. Risk profile varies dramatically: senior bond tranche LP is low-risk (collateral-backed), equity tranche or forward LP is higher-risk (residual claim or forward delivery risk).
FX corridor LP (P4) supplies $EDSD and corresponding fiat-backed stablecoins to off-ramp routes. APY 4-12 percent depending on corridor maturity. Risk: stablecoin de-peg events (rare but consequential), regulatory restrictions on specific corridors, currency-pair volatility. Emerging corridors pay more because the LP is taking on additional regulatory and operational risk.
INSURANCE POOL, FIVE ELEMENTS
EDMA's insurance pool backstops mis-attestations, oracle failures, smart contract bugs (within scope), and selected liquidation shortfalls. The pool is funded by a small haircut on attestor payouts plus slashing proceeds plus a portion of liquidation fees. Coverage is capped per incident and paid in $EDSD when a claim clears the dispute resolution process.
I1
Funding sourcesThree streams
The pool funds from three streams: (1) attestor payout haircut, typically 5-10 percent of every attestor reward routed to the pool; (2) slashing proceeds from attestors found to have submitted false or duplicate attestations; (3) 5 percent of every liquidation fee on the lending protocol. Combined, these streams create a sustainable insurance reserve that scales with protocol activity.
I2
Coverage scopeMis-attestations, oracle, contract
Coverage applies to: proven mis-attestations where an attestor signed evidence later found to be false; oracle failures that result in incorrect collateral pricing leading to unjust liquidation; smart contract bugs within the documented contract scope (excludes user error, lost keys, phishing). Coverage does not apply to market volatility losses, voluntary liquidations triggered by user inaction, or losses on assets outside the EDMA ecosystem.
I3
Claim processDispute resolution + veEDM panel
Claims initiate through the dispute resolution module. The claimant posts a counter-escrow deposit to deter frivolous claims; a veEDM-weighted panel reviews evidence and votes on the claim. Approved claims pay out from the pool in $EDSD; rejected claims return the counter-escrow minus a small panel fee that compensates reviewers. Average claim resolution: 7-14 days from submission to payout.
I4
Slashing integrationAttestor accountability
Attestors found responsible for a successful insurance claim face slashing of their staked $EDM. Slashing severity scales with the size of the mis-attestation and the attestor's history; first-time minor offenses slash 5-15 percent of stake, repeated or severe offenses can slash 50-100 percent. Slashed $EDM routes to the insurance pool, making the attestor accountability mechanism self-funding. The slashing record is public and visible in the attestor reputation registry.
I5
Payout cap and tierPer-incident max, tiered by claim type
Coverage is capped per incident to prevent a single catastrophic event from draining the pool. Default cap: $500K per individual claim, $5M per protocol incident (e.g., a single contract bug affecting multiple users). Larger losses cover up to the cap; excess loss is borne by the affected user. The cap structure is governance-set and adjustable through standard 72-hour timelocked proposals as the pool size grows.
The insurance pool is a structural feature, not an optional add-on. Every attestor reward funds it; every liquidation funds it; every slashed attestor stake funds it. Coverage is bounded and verifiable; the pool size, claim history, and active coverage are all publicly visible on-chain.
EDMA's insurance pool architecture in five elements. Funding from three streams (I1: attestor payout haircut, slashing, liquidation fees). Coverage scope (I2: mis-attestations, oracle, in-scope contract bugs). Claim process via veEDM panel (I3). Slashing integration making attestors accountable (I4). Per-incident caps preventing pool drain (I5).
Insurance mechanics in detail
Pool funding is self-sustaining. Three streams fund the pool: (1) 5-10 percent haircut on every attestor payout, taken before the attestor receives compensation; (2) slashing proceeds from attestors found responsible for false or duplicate attestations; (3) 5 percent of every liquidation fee on the lending protocol. The first stream funds the pool at the rate of protocol attestation volume; the second is event-driven; the third correlates with lending activity. Combined, the streams create a reserve that scales with protocol activity.
Coverage scope is bounded. Approved claims cover proven mis-attestations (an attestor signed evidence later found false), oracle failures (incorrect collateral pricing leading to unjust liquidation), and smart contract bugs within the documented scope. Excluded: market volatility losses, voluntary liquidations from user inaction, losses on assets outside EDMA, user error and key management failures (lost keys, phishing, social engineering). Scope is explicit at the documentation level so coverage expectations are clear.
Slashing makes attestors accountable. When an insurance claim is approved against a specific attestor's mis-attestation, that attestor's staked $EDM is slashed at severity-based rates: 5-15 percent of stake for first-time minor offenses, escalating to 50-100 percent for repeated or severe offenses. Slashed stake routes to the insurance pool, making the accountability mechanism self-funding. The slashing record is public and visible in the attestor reputation registry; serial offenders are removed from the approved attestor allowlist.
Per-incident caps prevent pool drain. Default caps: $500K per individual claim, $5M per protocol incident (e.g., a single contract bug affecting multiple users). Losses above the cap are borne by the affected user; the cap structure protects pool solvency. Caps are governance-set and increase as pool size grows; a pool with $50M+ in reserves typically supports higher per-incident caps than a pool at $1M.
Continue exploring EDMA DeFi
For the lending pool that LP P2 supplies, see Lending. For the veEDM staking layer that votes on insurance claims and parameter changes, see Staking (DeFi). For the structured products that LP P3 supports in secondary markets, see Structured finance. For the underlying tokenized assets traded on marketplace pairs see $ETT, $CLE, and $EDSD.
