Airbag is parametric, provably-solvent cover for Uniswap v4 liquidity providers. A v4 hook measures your impermanent loss on-chain; underwriters back the cover from their own wallets through 1inch Aqua. When the loss passes 0.5%, the payout fires automatically — no claims desk, no custody.
Liquidity providers make DEXs work. When the two tokens in a pool move apart, an LP ends up worse off than if they had just held the tokens — impermanent loss. It often eats more than the fees, and there is nothing to insure it with: on-chain cover barely exists, and what does exist pays out after committee votes and waiting periods.
Half of liquidity providers did worse than simply holding the two tokens (pools over $10M, May–Sep 2021).
Loesch et al. ↗In the same study, impermanent loss was bigger than all the fees the LPs collected.
arXiv 2111.09192 ↗On-chain insurance capital is in the hundreds of millions against ~$100B of TVL — over 98% of deposits are naked.
bex.co ↗Parametric trigger + keeper: once the hook sees the loss, one keeper transaction pays the holder. No claim at all.
try it ↗The whole protocol, start to finish — covered end-to-end by the Lifecycle test suite against the real Aqua contract.
An underwriter commits USDG to a cover market through 1inch Aqua. Aqua records a virtual balance — the tokens stay in the underwriter's own wallet, free to sit in a vault and earn yield. No pool, no custody, no TVL honeypot.
Premium is priced on a utilization curve — the fuller the book, the pricier the cover. It's pushed straight into the underwriter's reserve, and the buyer receives an ERC-6909 CoverNote: transferable, so cover can be sold or assigned.
A Uniswap v4 hook measures the LP's impermanent loss from the pool's own prices. Past the deductible, a permissionless keeper calls payout and the money lands in whoever holds the note — pulled straight from the underwriter's reserve in one transaction. No claim form, no committee, no waiting period. If the loss deepens later, the difference is paid too.
Policies that lapse are settled by anyone — a keeper, the underwriter — which frees the capacity for the next buyer. The underwriter's P&L is simply premiums earned minus payouts made, and it's verifiable on-chain at every block.
Every market enforces a solvency floor: outstanding cover can never exceed a fixed share of the reserve. Try to oversell and the transaction reverts. Anyone can read solvency() and check the backing at any block.
The core CoverApp handles reserves, pricing, notes and payouts. What counts as an "event" is a plug-in: the Uniswap v4 LP-loss trigger, the built-in depeg band, or any contract implementing ITrigger.
CoverHook measures an LP's real impermanent loss on a v4 pool; ILTrigger pays it out with a deductible, a cap, and a same-block manipulation guard.
Oracle band trigger (Chainlink / Pyth adapters with staleness checks). Pays 100% of notional — pushed automatically.
Proportional payout when a tokenized stock gaps down — pays by how far it fell below the strike, not all-or-nothing.
Junior first-loss / senior-protected waterfall. Two risk appetites, one reserve.
The reserve earns savings-vault yield while it backs cover, withdrawn just-in-time only when a payout fires. Underwriters stack premium + vault APY.
Every underwriter publishes their own risk curve; the CoverRouter splits each order across the cheapest ones in one atomic transaction.
No new token, no new pool. Airbag composes infrastructure that's already live.
A hook on the pool records each LP's entry and exit, so the loss is measured by the pool itself.
Shared-liquidity virtual balances: capital stays in the maker's wallet.
Paxos-issued, regulated stablecoin — premiums and payouts in the demo are in USDG.
Cheap enough to make per-policy notes and permissionless expiry practical.
Become an LP, buy cover on your position, crash the pool, and watch the airbag deploy. Stablecoin depeg and stock cover run on the same engine.