User FAQs

Cozy Safety Module FAQ

What is the Cozy Safety Module?

Teams can use a Cozy Safety Module to protect the onchain assets of their users from hacks and exploits. It’s a pool of funds reserved to reimburse users in case of qualifying losses. To use a tradfi analogy, you can think of it like “onchain FDIC.”

For Users Protected by a Safety Module

What kinds of losses are covered by my safety module?

The creator of the safety module defines what qualifies as a loss when they set up the safety module. You can see what constitutes a qualified loss by viewing the details of your safety module in the app.

How do I make a claim if I experience a qualifying loss?

The process for making a claim depends on the safety module creator's chosen method. Some may use an automated on-chain claims process, while others may use the DAO to distribute funds to users. You can verify the payout mechanism by visiting the safety module details page in the app.

What happens if the safety module funds are depleted due to a large-scale hack or exploit?

In the event that the funds are insufficient to cover all the losses, users will typically receive a payout pro-rata, based on the available funds and the total amount of losses. Some teams may choose to allocate funds in a discretionary manner. You can see how your safety module is configured in the details page in the app.

Are there any fees associated with using a protocol that has integrated the Cozy Safety Module?

No, there are currently no fees charged by the Cozy Safety Module protocol associated with using a protocol that has integrated the Cozy Safety Module.

For Safety Module Creators

How do I set up a safety module?

Visit and follow the creation flow. You’ll be able to configure and deploy your safety module right there.

How does the Cozy Safety Module determine what counts as a qualifying loss?

When integrating the Cozy Safety Module, you set the terms for what types of losses are covered.

What are the best practices for setting up payout triggers and handlers?

To minimize the risk of unintended payouts, ensure that the payout trigger is clearly defined and the payout handler is configured to manage funds correctly. Using the UI reduces the likelihood of mistakes. Reach out on discord if you want to see some examples of configurations.

How do I ensure there are enough funds in the pool to cover potential losses?

Set a payout cap or a maximum payout per user, then source capital for your safety module to ensure sufficient funds to pay out all users up to the payout cap. This can be done using balance sheet or treasury capital, protocol fees, or by incentivizing third-party deposits with rewards. If there are insufficient funds to pay out users up to the cap, funds may be distributed pro-rata or at your discretion. The available funds in the safety module are visible on-chain, providing transparency to users.

How do I determine the optimal size of the safety module fund?

Analyze your protocol's user data to determine the total value locked (TVL) and user balances. Calculate the payout cap needed to fully cover a majority of users, which is often achievable with a small fraction of the TVL. Reach out on discord if you want examples of how to do this analysis.

Can I adjust the reward emission rate after deploying the safety module?

Yes, you can adjust the reward emission rate and top up the reward pool at any time. However, changes to the safety module are subject to a time delay, ensuring users have sufficient notice to exit the protocol if they disagree with the changes.

For Safety Module Suppliers

How do I withdraw my funds if I no longer want to supply to the safety module?

You can withdraw your funds directly in the app. Once you initiate your withdrawal, you’ll have to wait for the withdrawal delay to elapse before you can remove your assets from the safety module.

How are reward rates determined for depositing funds?

Reward rates are set by the safety module creator, who deposits a quantity of reward tokens and defines an emission rate. Your earnings will depend on these settings and the total quantity of assets supplied by all users earning rewards.

What are the risks involved in depositing funds into a safety module?

The primary risk is that in the event of a payout, your deposited funds may be used to cover user losses. To mitigate this risk, look for safety modules with clear payout triggers and a history of responsible fund management.

Can I track the performance of my deposits in the safety module?

Yes, the Cozy UI allows you to view your accumulated rewards and track the performance of your deposits, providing transparency and keeping you informed about your investment.

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