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Synclear integrates multiple layers of risk coverage to protect protocol participants across different exposure types. Coverage is sourced from third-party protocol insurance providers, institutional custody arrangements, and structural design mechanisms built into the credit protocol itself. No single coverage layer is comprehensive in isolation; participants should review each category carefully to understand the scope and limitations applicable to their position.
Insurance and coverage mechanisms do not eliminate risk. Coverage is subject to provider terms, claim assessment processes, and policy exclusions. Synclear does not guarantee payout under any coverage arrangement. All participants should independently review the terms of applicable coverage providers before engaging with the protocol. Coverage limits, availability, and eligibility may change without prior notice.

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Coverage Overview

Synclear’s protection framework is organized into four primary categories, each addressing a distinct risk vector within the protocol stack.

Smart Contract Exploit Coverage

Synclear integrates with third-party on-chain coverage protocols to offer optional smart contract exploit coverage. This covers losses resulting from verified exploits of deployed Synclear contracts, including reentrancy attacks, logic errors, and unauthorized fund extraction. Coverage is purchased separately and is subject to the terms of the coverage provider. Participants must opt in; coverage is not automatic.Covered: Verified contract exploits resulting in direct fund loss.Not Covered: Economic design vulnerabilities (e.g., oracle manipulation leading to liquidation), losses from user error, or governance-related attacks.

Custodial Asset Insurance

Assets held in custody through Synclear’s institutional custody partners are subject to the insurance arrangements maintained by those custodians. Coverage typically includes crime insurance, cyber insurance, and fidelity bonds up to specified limits per custodian.Covered: Theft, unauthorized transfer, or loss of assets by the custodian’s operational failure or internal fraud, within policy limits.Not Covered: Market losses, protocol-layer events, or assets held in self-custody by users outside of Synclear’s custody partners.

Counterparty Default Protection

Synclear’s credit pools are structured with on-chain collateral requirements and liquidation mechanisms designed to protect lenders against borrower default. Senior tranches within credit pools carry first-loss protection from junior/equity layers. Collateral is liquidated automatically when LTV thresholds are breached.Covered: Structured protection via over-collateralization and tranche seniority mechanics.Not Covered: Shortfalls from rapid collateral price decline exceeding liquidation capacity, or under-collateralized credit positions (where permitted for institutional borrowers).

Coverage Exclusions

Certain categories of loss are explicitly outside the scope of any coverage layer provided or integrated by Synclear.Not Covered under any layer:
  • Losses from market price movement (mark-to-market losses)
  • User-initiated errors (incorrect address, voluntary transaction signing)
  • Regulatory action or asset freezing by government authorities
  • Losses arising from use of unofficial front-ends or third-party integrations
  • Force majeure events and acts of God

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Third-Party Coverage Providers

Synclear does not underwrite insurance directly. Coverage is facilitated through integrations with established on-chain coverage protocols and institutional custodians. Provider details, coverage limits, and current availability are published in the Synclear app under Settings → Coverage. Participants should verify coverage status and limits before entering positions.

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Filing a Coverage Claim

In the event of a covered loss, participants must initiate a claim directly with the relevant coverage provider according to that provider’s process. Synclear may provide supporting documentation (transaction records, contract state at time of incident) to assist in the claims process, but Synclear is not a party to coverage contracts and does not adjudicate claims. For smart contract exploit coverage, claims are typically subject to a governance vote or independent assessment committee process managed by the coverage provider. Timelines vary by provider.

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Coverage for Institutional Participants

Institutional lenders and borrowers operating under Synclear mandates may have access to enhanced coverage arrangements negotiated through the institutional onboarding process. Contact the Synclear institutional desk for details on bespoke coverage structures available to qualified participants.