How the Re Protocol Works
The Re Protocol channels on‑chain capital into real‑world reinsurance treaties through a fully transparent, blockchain‑native workflow. Participants stake stablecoins, receive yield‑bearing tokens, and earn diversified insurance returns, all while every dollar of collateral and every premium payment is visible on‑chain.
1. Capital Staking & Tokenization
Deposit
Users stake admitted assets (e.g., USDC) into the Insurance Capital Layer (ICL) smart contracts.
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Mint
The ICL mints either reUSD, the principal‑protected, low‑volatility token, or reUSDe, the profit‑sharing junior tranche.
reUSD / reUSDe appear in the user’s wallet
Custody
Idle funds are held in a Fireblocks vault under multisig. Balances are published daily to a Chainlink oracle.
Proof‑of‑reserves, publicly auditable
reUSD Yield Path
Daily price increases track the higher of:
7‑day avg. Secured Overnight Financing Rate (SOFR) + 250 bps (risk‑free floor)
Ethena sUSDe basis yield + 250 bps
Price is updated every UTC day at 00:00 via an on‑chain feed, with guardrails on maximum daily price-step size.
reUSDe Yield Path
Holders absorb portfolio losses and capture surplus profits, historically 16 – 25 % IRR net of underwriting & ops fees. A Target NAV (tNAV) is struck quarterly; price auto‑compounds daily toward that tNAV. Idle, undeployed reUSDe capital earns the sUSDe rate.
2. Intelligent Deployment via Surplus Notes
Vetted Reinsurer : Each cedent passes KYB/AML, rating, and underwriting due‑diligence screens.
Surplus Note : The ICL lends capital under a legally binding Surplus Note, ranking junior to policyholders.
§114 Trust Account : Drawn funds move off‑chain into a U.S. domiciled trust bank, providing admitted collateral for the reinsurer’s policies.
On‑Chain Mirror : Trust balances, premium inflows, and claim outflows are hashed and pushed to Chainlink, giving 24/7 proof of funds.
3. Liquidity & Redemption Logic
reUSD
Up to an actuarially‑set percentage of NAV
Queue/Window mode when instant is depleted
On‑chain idle cash → matured trust assets
reUSDe
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Quarterly (request window, pro‑rata fill)
Surplus released by actuary + idle sUSDe earnings
Any unfilled request auto‑rolls to the next window and continues to earn yield until settled.
4. Transparency & Risk Management
Chainlink Oracles : Publish price feeds, trust balances, surplus‑note schedules, and redemption queues.
Actuarial Analysis : Signs off on loss reserves and surplus release cadence.
Smart‑Contract Audits – All ICL, token, and oracle contracts undergo regular third‑party audits.
Fireblocks Policies – Multisig approvals and whitelisted addresses mitigate operational risk.
KYC/KYB Controls – Minting and redemption are permissioned for verified users only.
Third-Party Reserve Verification – Off-chain balances are attested daily by The Network Firm and published via Chainlink.
5. Participant Benefits
Access – Enter a once‑institution‑only asset class.
Yield Choices – Pick between stable reUSD or higher‑beta reUSDe according to risk appetite.
Composability – Use tokens as collateral in Curve, Pendle, Morpho, or other DeFi venues.
Real‑Time Data – Monitor portfolio balances and collateral 24/7 on‑chain.
Re Protocol bridges DeFi capital and global reinsurance, offering transparent, collateral‑backed yields while strengthening the resilience of insurers worldwide.
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