Skip to main content
Learn

What Is the Trade-off for a DAO When Purchasing IL Insurance Derivatives?

The premium paid for the insurance reduces the net yield from liquidity provision, trading lower returns for significant downside protection.
Greeks.Live13.11.25

What Is the Trade-off for a DAO When Purchasing IL Insurance Derivatives?

The primary trade-off is the cost of the premium paid for the insurance. While the put option (IL insurance) protects the DAO from significant downside due to price divergence, the premium reduces the overall net yield generated by the liquidity provision.

The DAO must weigh the cost of protection against the risk-adjusted return.

What Is the Impact of a Net Debit versus a Net Credit on the Collar’s Breakeven Point?
How Does the Cost of Option Premiums Impact the Overall Treasury Return?
How Does the Cost of the Put Option Relate to the Protection Provided?
What Are the Most Common Automated Strategies for Yield Farming a DAO’s Treasury Assets?

About

Contact

Editorial Policy

Terms of Service

Privacy Policy

Cookie Policy

© 2025 Greeks.Live

All Rights Reserved

Greeks.Live RFQ

Build by Noo on Engine

Source: The content on this website is produced by Greeks.live's proprietary analysis systems, which utilize advanced Large Language Models (LLMs). This information might not be subject to a full human review before publication and may contain errors.
Responsibility: You should not make any financial decisions based solely on the content presented here. We strongly urge you to conduct your own rigorous due diligence and to consult a qualified, independent financial advisor.
Purpose: All information is intended for informational purposes only. It should not be construed as financial, investment, trading, or any other form of professional advice. News and data are not trading signals.
Risk: The cryptocurrency, derivatives, and options markets are highly volatile and carry significant risk. By using this site, you acknowledge these risks and agree that Greeks.live and its affiliates are not responsible for any financial losses you may incur.