General Project Information
Project Name: Lunos Insurance Module - Bridge Risk Design
Project Manager: Lunos Team
Funding Request: USD 8000/month or ~200,000 SYS/month*
Duration: 5 months
Total Budget: 1,000,000 SYS*
- If the SYS/USD price goes up we’ll return the exceeding tokens to the Syscoin Management Team at the end of the 5 months.
Team Wallet: sys1qvqu5j2l580ugev4r9enq73fenx7nket00neurf
Voting
SuperBlock: SB119 - 2084880
Voting Deadline: August 14th 2025, 9:26:49 am
Vote Yes
gobject_vote_many 387c68f18679aa45404ce82967e3ad3baec37903a89efcc7b79408638fbbc9fc funding yes
Vote No
gobject_vote_many 387c68f18679aa45404ce82967e3ad3baec37903a89efcc7b79408638fbbc9fc funding no
Vote Abstain
gobject_vote_many 387c68f18679aa45404ce82967e3ad3baec37903a89efcc7b79408638fbbc9fc funding abstain
## Executive Summary
The Lunos Insurance Module represents a critical advancement in validator protection and risk management for the Syscoin ecosystem, built entirely on zkSYS. This proposal introduces an automated insurance system specifically focused on protecting the Syscoin bridge, with Syscoin NEVM serving solely to retrieve masternode addresses for validation purposes.
The system deploys EigenLayer on Syscoin, enabling masternodes to allocate capital and provide protection for projects requiring validation on zkSYS, including oracles and other critical infrastructure. The first and primary use case targets the bridge currently under development by the Syscoin Foundation, providing essential protection against transaction delays and failures.
This insurance framework creates additional yield opportunities for masternodes through fees and revenue generated from protection and validation mechanisms, while establishing the foundation for a broader AVS ecosystem where masternodes can secure various protocols on zkSYS and earn sustainable returns from their participation.
## Objectives & Timeline
| Month | Milestone |
|---|---|
| Month 1 | Research & Foundation |
-
Research Syscoin bridge architecture and protection requirements*
-
Fork and adapt EigenLayer core to work with Syscoin infrastructure
-
Establish technical specifications for zkSYS integration|
|Month 2|NEVM Integration & Masternode Setup -
Implement masternode address retrieval system from Syscoin NEVM
-
Enable masternode capital allocation for zkSYS protocol protection
-
Design yield mechanisms for masternodes from validation fees and insurance premiums|
|Month 3|EigenLayer Deployment -
Deploy adapted EigenLayer on zkSYS** with SYS NEVM integration
-
Establish framework for future AVS development
-
Begin Lunos platform development|
|Month 4|Lunos Deployment & Bridge Integration -
Deploy Lunos insurance platform on zkSYS**
-
Develop bridge monitoring* and automated payout mechanisms
-
Integrate with masternode capital allocation system|
|Month 5|Policy & Production Launch -
Finalize bridge insurance policy with risk models and pricing document
-
Community and governance approval process for insurance policies
-
Production deployment** with bridge integration*
-
Documentation
-
Yield distribution implementation|
-
The proposal assumes that the bridge will be defined by then. If the bridge is delayed, the project’s deliverables might be delayed as well.
** The proposal assumes that zkSYS will be live. If zkSYS is not live by then, the project’s deliverables might be delayed or the deployments will happen on the testnet.
## Deliverables
First Phase:
- NFT Sales Policy for Syscoin Bridge
- Deploy Lunos on zkSYS**
- Deploy EigenLayer on zkSYS with SYS NEVM integration
-
Adapt EigenLayer to Syscoin
Second Phase(Future proposal):
- Cross-chain monitoring system with EigenLayer and AVS oracle integration
- Automated insurance reimbursement engine for validator misbehavior, AVS failure, and bridge downtime
- Masternode checkpoint system with monthly bridging operation requirements
- Validator collateral management with deposit and automated service options
- Bridge fee redistribution mechanism
- Comprehensive documentation including technical specifications and user guides
Benefits to the Syscoin Ecosystem
Enhanced User Protection: Automated insurance coverage builds user confidence and reduces risk exposure when interacting with validators and cross-chain operations, providing essential protection against the increasing frequency of bridge hacks and exploits that have plagued the DeFi ecosystem.
Masternode Yield Enhancement: Creates additional revenue streams for masternodes through validation fees and insurance premiums, making masternode operation more profitable and sustainable while strengthening network security.
Validator Accountability: The slashing and collateral system ensures validators maintain high standards of performance and behavior, improving overall network reliability.
Cross-chain Capabilities: Integration with EigenLayer and Nevm positioning demonstrates Syscoin’s commitment to interoperability and advanced Layer 2 solutions.
Revenue Generation: Bridge fee redistribution creates sustainable incentive mechanisms while generating revenue for validator participation.
Ecosystem Growth: Reduced risk profile attracts more users and developers to build on Syscoin infrastructure with confidence in protection mechanisms.
Innovation Leadership: First-to-market automated insurance module showcases Syscoin’s technical capabilities and forward-thinking approach to DeFi risk management.
Proposed Partnerships and Integrations
EigenLayer Integration: Leveraging EigenLayer’s slashing infrastructure for validator behavior monitoring and automated response triggers.
AllNodes Collaboration: Proposed integration for automated validator services, providing convenience options for validators who prefer managed solutions.
AVS Oracle Network: Integration with external AVS oracles for additional validation signals and cross-chain state verification.
Risk Mitigation
Oracle Reliability: Multiple oracle sources and cross-validation mechanisms prevent single points of failure in signal detection.
Economic Security: Collateral requirements and fee structures designed to make attacks economically unfeasible while maintaining validator participation.
Technical Redundancy: Extended challenger/slasher system provides backup validation mechanisms across multiple chains.
Gradual Rollout: Phased deployment with extensive testing phases to identify and resolve issues before full production launch.
## Commitment to Transparency
Throughout the 5-month development period, the team will:
- Publish regular development updates via Lunos Discord community channels
- Share technical documentation and implementation progress publicly
- Provide monthly progress reports with milestone achievements and challenges. Published on Syscoin Governance Forum
- Release open-source components where appropriate for community review
- Conduct public testing phases with community feedback integration
- Publish final technical specifications and deployment guides
## Conclusion
The Lunos Insurance Module represents a fundamental advancement in DeFi risk management and validator accountability. By providing automated protection against validator misbehavior, AVS failures, and bridge downtime, this system will significantly enhance user confidence in the Syscoin ecosystem.
The integration with EigenLayer, and zkSYS demonstrates Syscoin’s commitment to cutting-edge cross-chain infrastructure while the automated insurance mechanisms provide real utility that directly benefits users and validators alike.
This proposal positions Syscoin as a leader in decentralized insurance solutions while creating sustainable economic incentives that will drive long-term ecosystem growth and adoption.
Every validator. Every transaction. Every user.
Protected by Lunos — secured by Syscoin.
We’re committed to delivering this critical infrastructure, enhancing ecosystem security, and establishing Syscoin as the premier destination for secure, automated DeFi operations.