How the Re Protocol Works

The Re Protocol is a decentralized framework designed to allocate on-chain capital efficiently and transparently to reinsurance contracts. By leveraging blockchain technology, the protocol transforms traditional reinsurance operations, eliminating inefficiencies and introducing a more streamlined, accessible approach for participants.

Key Mechanisms

1. Capital Staking: Participants stake admitted assets such as USDC into the Insurance Capital Layer (ICL). These assets are pooled and tokenized as reUSD or reUSDe, providing participants with proportional claims on the protocol’s capital base and its returns.

2. Intelligent Deployment: The capital within the ICL is allocated to vetted Risk Pools managed by expert Cell Managers. These Risk Pools represent specific reinsurance agreements or portfolios of agreements, ensuring that capital is deployed with precision and oversight.

3. Transparent Reporting: All transactions and allocations are recorded on-chain, providing participants with real-time visibility into the protocol’s operations and performance.

Tokenization and reUSD or reUSDe

• Representation of Value: reUSD and reUSDe tokens serve as a liquid, fungible representation of a participant’s stake in the protocol. As the underlying reinsurance contracts generate returns, the value of reUSD and reUSDe appreciates, reflecting the performance of the protocol’s contracts.

• Integration with DeFi: reUSD and reUSDe can interact seamlessly with the broader DeFi ecosystem, enabling participants to leverage their holdings for lending, borrowing, or other yield-generating activities.

Efficient Risk Management

The protocol employs a rigorous vetting process to ensure that only the most reliable Cell Managers and reinsurance agreements are onboarded. Key measures include:

• Know Your Business (KYB): Cell Managers undergo thorough KYB and AML checks before being approved to manage Risk Pools.

• Collateralization: All reinsurance agreements are fully collateralized, reducing counterparty risk and ensuring that claims can be paid without delay.

Benefits for Participants

• Access to the Reinsurance Market: Historically reserved for large institutions, the protocol democratizes access to this stable, uncorrelated asset class.

• Simplified Participation: Through intuitive interfaces and blockchain automation, participants can engage with the protocol without requiring extensive industry knowledge.

• Compounding Returns: By holding reUSD, participants benefit from compounding growth driven by reinsurance returns and strategic capital management.

Example Workflow

1. Staking: A participant deposits $10,000 USDC into the ICL. In return, they receive reUSD tokens representing their share of the pooled capital.

2. Deployment: The ICL allocates $1 million to a Risk Pool covering a portfolio of automobile insurance policies.

3. Returns: After 18 months, the Risk Pool generates a 15% return. The participant’s reUSD tokens increase in value accordingly, reflecting the realized gains.

The Re Protocol is designed to bridge the gap between DeFi and the global reinsurance industry, offering participants a unique opportunity to engage with this critical market through a secure, transparent, and efficient platform.