How cover works

A cover position is a fixed USDC payout that is designed to execute if Base halts for longer than a chosen length of time. The cover buyer makes three choices, pays a premium upfront, and has nothing else to do.

All rates on this page are illustrative and subject to governance.

Choosing cover#

A cover buyer chooses:

• Payout size: the amount of USDC paid if the cover position is triggered, for example 10,000 USDC.
• Trigger tier: the halt duration that triggers the payout. There are three: the 15 min tier, the 1 h tier and the 3 h tier. Each has a threshold, and a halt whose duration exceeds the threshold triggers the tier.
• Cover period: each cover position runs for one 30-day cover period.

Cover can only be bought while the tier has capacity. Each tier is fully collateralised, so cover outstanding in a tier can never exceed what the tier can pay at once; see the capacity rule.

Premium#

The premium is paid upfront in USDC for one 30-day cover period:

premium = payout size × tier rate

These are the rates the simulator uses. Shorter tiers cost more because they are triggered more often: every halt that exceeds the 1 h threshold also exceeds the 15 min threshold, but not the other way round.

Of each premium, 90% is credited to the tier's vault and 10% is the protocol fee; see Fees.

Lifecycle#

1. Bought. The cover buyer pays the premium and receives a cover position for the chosen tier and payout size.
2. Active. For the 30-day cover period, any halt that begins during the period is covered.
3. Triggered. If the halt duration, as measured by the Sequencer Uptime Feed, exceeds the tier's threshold, the position is triggered.
4. Paid. In the first blocks after the restart, settlement pays the full payout size to the cover buyer's address. The position then closes.
5. Expired. If no qualifying halt begins during the period, the position expires at the end of it. The premium is not refunded.

Nested tiers#

The thresholds are nested: 15 min, then 1 h, then 3 h. A halt that crosses a longer threshold has already crossed every shorter one, so one halt can trigger several tiers at once.

A tier is triggered only by a halt that lasts longer than its threshold. A 59 min halt pays nothing on the 1 h tier, however close it came.

One payout per position#

Each cover position pays out at most once. After it pays, it closes, even if time remains in its cover period, and a second halt in the same period does not pay it again. A cover buyer who wants cover for the rest of the period needs a new cover position, subject to capacity.

A position that has not been triggered stays active. If a 30 min halt occurs while a cover buyer holds 1 h cover, that position is not triggered and can still be triggered by a later halt in the same period longer than 1 h.

Holding several tiers#

Each cover position covers one tier. A cover buyer can hold positions in more than one tier, each with its own premium and payout size. For example, 10,000 USDC of 15 min cover and 10,000 USDC of 1 h cover cost 1,600 USDC in premiums (1,200 plus 400). A 2 h halt during the period would trigger both and pay 20,000 USDC in total. A 50 min halt would pay only the 15 min position.

Expiry and what cover does not do#

If the period ends without a qualifying halt, the position expires. The premium stays where it was allocated when it was paid: with the vault, the stakers and buy and burn.

Cover pays a fixed payout size, not the cover buyer's actual loss, and it is not an insurance policy. A halt that falls short of the threshold pays nothing, whatever it cost the cover buyer; see basis risk. For complete numbers, see Worked examples.