also hoping in general that we actually figure out a better insurance system for the industry moving forward
a "10M insurance fund" that nobody can verify the existence of ain't gonna cut it (Stream coded)
I like the idea of letting users pick between Sr vs Jr tranches, and teams doing that are:
- @aave's Umbrella module
- @infiniFi iUSD vs siUSD
- @ResolvLabs USR vs RLP
Idle Finance tried to do this a long time ago, but didn't see a ton of traction (too ahead of the times, perhaps)
Still, just having tranches allows you to hedge or speculate on your risk exposure, but it doesn't actually solve the "skin in the game" problem of the entity/entities (i.e. Curators and Risk Managers) that makes the decisions that created the risks in the first place
Stronger Alignment requires the Curators and Risk Managers to have significant exposure to the Junior Tranche:
- They are first-loss capital if something gets borked (so they will be extra vigilant against doing risky things)
- They earn more if everything goes right (paid for by the Senior Tranche depositors)
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