Token Value Accrual: TAKA and the Reprotection Pool (rePool)

The rePool is an exciting innovation that is an alternative to traditional reinsurance funds in the context of the Takadao ecosystem. It uses the TAKA token as its native token and allows the Takadao community to participate in “reprotection” of the tDAOs while earning yield. On their own, each individual tDAO is unable to accumulate an additional external reserve pool, but this is now possible through rePool.

The rePool works by getting TAKA token holders to lock up their token for a period of time. This action of locking up TAKAs benefits the ecosystem as it incentivizes the holding of the TAKA token which contributes to price stability. For this service, Takadao shares a portion of its revenue with RePool stakers who receive it as yield that is distributed regularly.

The rePool is an external pool of reserves that can be called upon in case any of the tDAOs experience unexpectedly high loss ratios. Note that the tDAOs already have a self-adjusting underwriting algorithm that constantly adjusts reserves and benefits to optimize for tDAO fund solvency. As such, the rePool only kicks in when losses unnaturally extend beyond what is reasonably modelled.

When a tDAO’s performance falls below its rePool support level, the funds locked in the rePool are made available to Takadao to be used to support the tDAO in increasing the Benefit payment. These funds cover a part of the shortfall and not the entire amount. Takadao makes a 0% interest loan to the tDAO, and the loan is repaid over time by the tDAO if and when their performance is strong enough to carry such repayments. Takadao then repays rePool.

rePool loan example

Amount of Benefit due	Benefit of 10,000 USDC if tDAO health is 100%
Current tDAO health (BMA)	70%, which would give a Benefit of 10,000 * 0.70 = 7,000 USDC
rePool Threshold	75%, which gives applicable rePool cover = 0.75 - 0.70
rePool Cover %	60%, the rePool covers 60% of the Threshold Amount
rePool Cover	10,000 x (0.75 - 0.70) x 0.60 = $300
Final Benefit and performance	Benefit is 7,000 + 300 = $7,300, a performance of 73%
rePool Loan	Loan to the tDAO: $300

Loan amounts are denominated in USDC. When a loan is triggered as described in the previous section, the equivalent amount of TAKA is removed from rePool and swapped for USDC. The USDC is then transferred to Takadao, which in turns makes the loan to the tDAO in order to increase the Benefit Payout.

While this is a loan from the perspective of the TAKA holder, the required TAKA are taken from the pool and sold in the market to generate the USDC to make the transfers.

In addition, the rePool helps tDAOs in generating more surplus. Each tDAO looks at the rePool size in USDC (current TAKA market value) and takes a percentage of this (60%) when calculating its surplus. The higher the value of the staked TAKA in the rePool, the larger the surplus since the tDAO can earn its reserves quicker and share those with its members. This is another key benefit of the rePool for the tDAOs and something that cannot be achieved by each tDAO alone.