Third Floor Mutual (3F Mutual) is a rainy day fund like mechanism which helps you to hedge against MakerDAO collapse risk. It is neither an option nor a short position of ETH/DAI/MKR. Rainy day fund like design means it's more like collective insurance.
The insurance of MakerDAO/DAI Stablecoin System
In brief, you get compensation when MakerDAO crashes (ESM triggered).
- There's a large pool(rainy day fund) underwriting insurance.
- You buy some units of insurance. The price of a single unit is determined by a given formula. Learn more.
- You can choose to pay an extra fee to get a longer insured period. The more you pay, the longer the insurance lasts.
- If MakerDAO ESM is triggered during your insured period, you will get parts of the funds in the pool, depending on the percentage of insurance units you have.
- When you buy insurance, you will get attached shares as much as the number of units you buy. Unlike insurance, share never expires.
- When later players buy insurance, your portion of insurance is reduced, but you'll get dividends instead (from shares). It's fair, after all.
- With the concept of insurance, players can also turn out to be agents. Register as an agent and enjoy the referral system to step up for increasing referral bonuses.
Here are the tutorials for you to understand the details of Third Floor Mutual.
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