---
# System prepended metadata

title: NFTPerp Insurance Fund

---

# NFTPerp Insurance Fund

100 ETH of liquidity was bootstrapped to the nftperp v1 insurance fund on November 24, 2022. The IF's balance would increase by:

1) Trading fees, where 0.3% of each trade would go to the IF 
2) Funding from traders during minority scenarios
3) Liquidations when there was no bad debt

This would then be used to cover the following scenarios:

1) Bad Debt During liquidation
2) Funding Payments during majority scenarios
3) Protocol bugs
4) Repeg


nftperp beta did 281855 ETH in volume, and the IF made 502.48 ETH in fees and 63.13 ETH in liquidation while losing 241 ETH in funding, and 13 ETH from repegs. Combined, the 100 ETH of liquidity in IF had grown to 390 ETH by April 22, 2023. This is a realized growth of 293% in 5 months and at least 700% annualized before the vAMM model had to be closed due to protocol-level inefficiencies.

[[Source]](https://dune.com/aster2709/nftperp-beta)

# NFTPerp V2
nftperp V2 uses a tried and tested orderbook-based mechanism where the protocol is never a counterparty to solve its protocol-level risks. It has an optimzied IF where anyone can add liquidity to it. A trader adding liquidity to IF would profit by:

1) Trading fees where 0.15% of each fee would go to the IF
2) Liquidation when there is no bad debt
3) Token Incentives

And lose on:

1) Liquidation when there is bad debt
2) Protocol risks


As shown, IF based funding payments and repegs, a big inefficiency in nftperp v1 is no longer a thing. Additionally, there is now a token incentive. And now, the protocol risk component can be hedged off with insurance.

Since September 13, 2023, we have deployed over 9 instances of paper trading contests. Over 500 traders have traded over 20 thousand times in these deployments. In 5 early deployments, liquidity was added once to the IF and never readded. This provides a benchmark to measure its performance, and its performance is summarized below:


| Contract                                   | Deployed Block | Duration | Starting Balance | Ending Balance | Return (%) |
|--------------------------------------------|----------------|----------|------------------|----------------|------------|
| 0xeFbcbB03C88C16F20De27711842EC8Ed1D68F79D | 150069853      | 7 Days   | 5871.07          | 6916.97        | 17         |
| 0xe71aD99B466422Fe291a5756f1B7542f6b55eA48 | 152357670      | 7 Days   | 7111.34          | 8118.9         | 14.16      |
| 0x708a2b9d2E1c07DB6F12275fc2f22B7f39f22e0d | 155300190      | 7 Days   | 7504.89          | 8103.67        | 7.97       |
| 0xE1b49D80792516928901aF2C97526522E80956bc | 157521483      | 7 Days   | 8794.8           | 8475.50        | -3         |
| 0xeB185bDD69EcEb8189eEE4A9244aaAa1Dd4EB0bF | 159799408      | 7 Days   | 9188.58          | 11158.6        | 21.44      |


As shown above, in the 5 deployments of IF, the IF returned an average of over 10% in 7 days, totaling an annual APR of over 520% -- in line with the v1 performance.

** We did not include the first deployment here because it made over 2000% due to a test liquidation. Other instances were not included because liquidity was added in the middle because of changing risk parameters. All the ignored contracts made a profit except one -- in line with the contracts shown here.

[[Source]](https://colab.research.google.com/drive/1_psW-e3XXhNnnDy2oSjBx-Gk8z9b2xEj?usp=sharing)