Insured Vault lifecycle

Insured Vault example for Smokehouse USDC on Morpho

Deposit

1. User deposits an asset (e.g. USDC) into a supported vault (e.g. Morpho Smokehouse USDC) to mint and receive vault shares (e.g. bbqUSDC).

2. User submits a deposit request to an Insured Vault configured to cover the relevant vault shares (e.g. bbqUSDC)

   1. The request is recorded and the vault shares are held by the Insured Vault pending settlement.

   2. This request can be canceled by the user at any time before settlement to withdraw the vault shares pending settlement.

3. The deposit request is typically settled within 2 Ethereum blocks (<30 seconds). On settlement, insurance coverage becomes active and the Insured Vault issues covered shares (OC-bbqUSDC) to the user.

4. Yield continues accruing in the underlying vault. The premium is streamed from accrued yield for as long as cover remains active.

Withdrawal

1. User submits a redemption request by providing covered shares (OC-bbqUSDC) to the Insured Vault.

   1. The request is recorded, shares are locked pending settlement and continue to be insured.

   2. The user can cancel the redemption request any time before settlement.

2. On redemption settlement, coverage ceases for the redeemed vault shares (bbqUSDC), which become available to withdraw (ERC-7540 native flow) or can be pushed to the user's wallet depending on desired user experience (OpenCover extended ERC-7540 standard).

3. In the unlikely event the redemption request does not settle, the onchain exit guarantee allows the user to claim their vault shares (bbqUSDC) 24 hours from request creation.