Layered Insurance

If something goes wrong, what protections absorb the loss? A three-tiered defensive insurance stack designed to insulate $USN and $sUSN holders.

Protect

In digital asset management, true protection requires defense-in-depth. Noon relies on a 3-Layer Insurance Framework spanning protocol-level cash reserves, on-chain smart contract cover, and institutional broker insurance to absorb market noise, smart contract vulnerabilities, and custodial insolvencies.

Users sit behind all three protective layers.

1. Layer 1: The Noon Insurance Fund (NIF)

The Noon Insurance Fund (NIF) serves as the protocol's first-line defensive buffer. Funded continuously by 10% of total raw protocol returns and held in liquid stablecoins ($USDC / $USDT), the NIF performs three critical roles:

• Absorbs Daily Volatility: Neutralizes short-term mark-to-market fluctuations from assets like AAA-rated JAAA CLOs or private credit valuations, ensuring that temporary price noise never impacts $sUSN daily appreciation.

• Covers Insurance Deductibles: Bridges the deductible gap during Nexus Mutual claim payouts to guarantee 100% principal recovery for stakers.

• Absorbs Liquidity Slippage: Covers transaction slippage when positions must be unwound rapidly during high-volume withdrawal windows.

Seasoning & Buyback Engine: NIF contributions are seasoned for 12 months to maintain a robust protocol safety buffer. After 12 months, unutilized surplus is used to buy back $NOON on the open market and distribute it pro-rata to $sNOON stakers, ensuring capital either protects the protocol or rewards the community.

2. Layer 2: On-Chain Smart Contract Cover

All scaled DeFi strategy deployments (such as Aave, Compound, or Pendle PT pools) carry active, on-chain protocol insurance purchased through Nexus Mutual.

• Mandatory Integration Gate: Insurance verification is a mandatory prerequisite before any strategy adapter scales to full deployment capacity.

• Auditable On-Chain Policies: All coverage limits, active policies, and expiration dates are published transparently on-chain, making "insured" an independently checkable claim rather than a marketing promise.

• Controlled Testing Exclusion: Early, small-scale strategy test deployments (sized at less than 50% of the active Insurance Fund balance) may operate un-covered temporarily while proving execution at low volumes. Once scaled, 100% of deployment capital requires active cover.

3. Layer 3: Custodial & Broker-Dealer Protections

For tokenized traditional assets (such as U.S. Treasury bills and JAAA CLOs), collateral is protected by regulated institutional insurance infrastructure through our custodial and broker-dealer partners:

• SIPC Asset Protection: Assets held via our RWA execution partner Dinari through Alpaca Securities (a licensed U.S. broker-dealer and FINRA member) carry standard Securities Investor Protection Corporation (SIPC) coverage protecting up to $500,000 per account.

• $150 Million Excess Insurance Policy: In addition to standard SIPC coverage, Alpaca maintains an excess insurance policy through Lloyd’s of London, providing up to $150 Million in aggregate excess protection ($75 Million for securities and $75 Million for cash) per account.

• Institutional Fund Isolation: Private credit positions (such as Fasanara F-TAC) sit inside regulated, bankruptcy-remote institutional fund structures subject to independent third-party administration.

How a Loss Event Flows Through the Stack

By layering cash-reserve buffers, smart-contract protocol cover, and institutional broker insurance, Noon creates a resilient financial framework that protects user capital across all market environments.