🔬Bad Coverage

Bad coverage is a term coined by Agio. It defines a state where the treasury supports more assets than it could provide if all assets went down to -100%.

Several layers of security are implemented in case of a Bad Coverage

1. 1. The second layer of the treasury would come into play. It holds the same amount of $AGIO as the first layer and this funds would be used to transfer additional $AGIO into the main treasury to mitigate the bad coverage.


2. In the unlikely worst case scenario where the users have withdrawn all the $AGIO stored in the treasury, the platform will stop taking fees and will automatically return the assets including the coverage of losses in $AGIO at this point in time to its users. In the aftermath, Agio would create a new main treasury from the funds available in the second layer treasury and the users are free to re-deposit their assets for coverage. No user funds are therefore affected as it is a fully decentralized protocol.