> For the complete documentation index, see [llms.txt](https://safu-protocol.gitbook.io/safu/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://safu-protocol.gitbook.io/safu/slashing-mechanism/factors-to-consider.md).

# Factors to consider

As mentioned, given many cover events are subjective, we need to create a coverage policy with some **key elements** to ensure clarity, fairness, and enforceability for all users.

What does a comprehensive coverage policy typically includes? 

1\. **Coverage Scope and Conditions**

* **Scope of Coverage**: What is covered and what is not (e.g., specific depeg events, operational failures, or solvency issues).
* **Conditions for Coverage**: Criteria that must be met to trigger the coverage (e.g., sustained depeg thresholds, specific time windows, or oracle data points).

#### 2. **Trigger Mechanisms**

* **Market Freezing Trigger**: Events that cause markets to freeze temporarily, such as price thresholds being breached (e.g., USDe price below $0.99).
* **Price Data Source (Oracle)**: A reliable and objective source for pricing information (e.g., CoinGecko, Chainlink, or custom oracles).

#### 3. **Compensation Framework**

<mark style="color:red;">**`This will be set fix at inception using the variable Yield Distribution Framework.`**</mark>

* **Cover Level**: A formula or mechanism to calculate the amount of coverage available relative to deposited funds and risk levels.
* **Payout Structure**: How payouts are distributed among claimants (e.g., proportional distribution based on deposits).
* **Limits and Exclusions**: Any maximum payout limits or scenarios explicitly excluded from coverage (if any).

#### 4. **Claims Process**

* **Claim Submission**: Steps for submitting a claim, including required evidence and timeframes.
* **Grace Period**: A period during which a claimant can withdraw or adjust their claim without penalty (e.g., if market conditions change).
* **Challenge Period**: A window during which others can challenge the validity of a claim (e.g., through Kleros or arbitration).

#### 5. **Dispute Resolution**

<mark style="color:red;">**`SAFU will use Kleros`**</mark>

* **Arbitration Mechanism**: A process to resolve disputes over claims (e.g., using decentralized courts like Kleros).
* **Final Decision**: Binding decisions from the arbitrator to ensure disputes are resolved conclusively.

#### 6. **Market Behavior During Events**

Tied to [#id-2.-trigger-mechanisms](#id-2.-trigger-mechanisms "mention") and [Variable YDF](/safu/variable-ydf.md)

* **Yield Distribution**: How yield or earnings are handled during freezing or claim periods.
* **Market Status**: Policies on freezing or unfreezing markets based on specific triggers or resolution outcomes.

#### 7. **Data Verification**

* **Oracle Data Integrity**: A mechanism to verify and validate oracle data from that specific market.
  * The main source that should be taken as valid
* **Fallback Sources**: Alternative data sources if the primary oracle fails (e.g., consensus of credible market sources).

#### 8. **Timeframes**

<mark style="color:red;">**`Kleros These will be built at SAFU protocol layer at inception but might change for different markets`**</mark>

* **Freeze Duration**: Duration for which markets are frozen during an event or dispute (no coverage purchases and no restakers opt-out)
* **Cooldown Periods**: Timeframes for slashing, claim resolution, or reactivating markets.

#### 9. **Policy Termination**

* **Conditions for Termination**: Scenarios where the policy automatically terminates (e.g., permanent delisting of the asset or depletion of funds).

#### 10. **Acknowledgment and Agreement**

* **User Acknowledgment**: Terms that users agree to by participating in the policy (e.g., agreeing to abide by Kleros decisions or oracle data).
*

```
<figure><img src="/files/uVTiiYw3pVm3dR0odkMk" alt=""><figcaption><p>Diagram exemplifying the whole process</p></figcaption></figure>
```