Insure The Rug

Rug Pull Insurance is an on-chain parametric insurance protocol that protects DeFi and NFT users against project collapses and rug pulls.

In today’s market, Web2 insurance is a highly monopolized and extremely profitable industry — built on the principle that fear is stronger than greed. Yet, retail investors in Web3 have no option to hedge against project risks like sudden liquidity drains or admin exploits.

Our solution: when a user invests in a token, NFT, or liquidity pool, they can toggle “Add Insurance.” Premiums are managed in two ways:

50% to pooled stable yield — generating steady returns to back claims.

50% to short positions/hedging strategies — ensuring liquidity for payouts during a collapse.

If predefined conditions are met (e.g., >70% TVL drained, token collapse, exploit), payouts are triggered automatically. No centralized claim process, no delays — just fast, verifiable protection.

This creates a new retail risk market in Web3 while giving liquidity providers stable yield opportunities and exposure to insurance as an asset class.

We built Rug Pull Insurance with a modular design:

• Smart Contracts (Solidity, Sepolia Testnet)

  • Insurance Pool: Splits premiums into stable-yield allocation and hedging positions.
  • Parametric Trigger: Detects rug pull events using oracle + liquidity data.
  • Payout Engine: Instantly executes insured payouts.

• Premium Allocation

  • Half routed into yield-bearing pools (Aave/Compound equivalents).
  • Half deployed into short positions to profit if covered asset collapses.

• Data & Oracles

  • Pyth Network price feeds for real-time asset monitoring.
  • DEX APIs (Uniswap v3) to track TVL and liquidity changes.
  • The Graph-style queries for event verification.

• Frontend (Next.js + Wagmi + RainbowKit)

  • Seamless “Add Insurance” toggle during token/NFT purchases.
  • Dashboard for covers, premiums, pool stats, and payouts.

• Hacky Bits

  • Custom MockERC20 + Mint.s.sol scripts to simulate tokens and liquidity crashes.
  • Parametric logic for TVL drop detection within 24h windows.
  • Testnet integration with hedging positions to simulate real insurance mechanics.

By blending yield strategies + hedging with parametric payouts, Rug Pull Insurance brings a new primitive to DeFi: fear-backed protection for retail investors, built trustlessly on-chain.