> For the complete documentation index, see [llms.txt](https://covermax.gitbook.io/covermax/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://covermax.gitbook.io/covermax/protocol-phases.md).

# Protocol Phases

## Overview

CoverMax Protocol operates on a structured 7-day cycle divided into four distinct phases. This phase-based approach ensures orderly capital deployment, risk management, and claims processing while maintaining continuous market operations.

## Phase Timeline

```mermaid
gantt
    title CoverMax Protocol Phases
    dateFormat  HH:mm
    axisFormat  Day %d
    
    section Cycle
    Deposit Phase (48h)     :done, deposit, 00:00, 48h
    Coverage Phase (72h)    :active, coverage, after deposit, 72h
    Claims Phase (24h)      :crit, claims, after coverage, 24h
    Final Claims (24h)      :crit, final, after claims, 24h
```

## Phase 1: Deposit Phase

### Duration: 48 hours (2 days)

### Purpose

The deposit phase allows users to contribute yield-bearing assets to the insurance pool and receive risk tokens in return.

### Allowed Actions

| Action             | Permitted | Details                     |
| ------------------ | --------- | --------------------------- |
| **Deposit Assets** | ✅ Yes     | Deposit aUSDC or cUSDT      |
| **Receive Tokens** | ✅ Yes     | Get CM-SENIOR and CM-JUNIOR |
| **Trade Tokens**   | ✅ Yes     | Immediate Uniswap trading   |
| **Withdraw**       | ✅ Limited | Equal amounts only          |
| **Submit Claims**  | ❌ No      | Not yet in coverage         |

### Technical Implementation

```solidity
modifier onlyDuringPhase(Phase requiredPhase) {
    _updatePhaseIfNeeded();
    if (currentPhase != requiredPhase) {
        revert InvalidPhaseForDeposit();
    }
    _;
}

function depositAsset(address asset, uint256 amount)
    external
    onlyDuringPhase(Phase.DEPOSIT)
    whenNotEmergency
    nonReentrant
{
    // Deposit logic
}
```

### Key Characteristics

1. **Capital Accumulation**: Build insurance pool size
2. **Token Distribution**: Fair 50/50 senior/junior split
3. **Price Discovery**: Initial market pricing on Uniswap
4. **No Claims Risk**: Coverage not yet active

### Strategy Considerations

* **Early Depositors**: May get better token prices
* **Late Depositors**: Can observe pool size before committing
* **Traders**: Arbitrage opportunities as liquidity builds

## Phase 2: Coverage Phase

### Duration: 72 hours (3 days)

### Purpose

The active insurance period where the protocol provides coverage for potential claims while tokens continue trading.

### Allowed Actions

| Action             | Permitted | Details                 |
| ------------------ | --------- | ----------------------- |
| **Deposit Assets** | ❌ No      | Deposits closed         |
| **Trade Tokens**   | ✅ Yes     | Active secondary market |
| **Withdraw**       | ✅ Limited | Equal amounts only      |
| **Submit Claims**  | ✅ Yes\*   | Off-chain process       |
| **Monitor Risk**   | ✅ Yes     | Track protocol health   |

\*Claims submission happens off-chain with on-chain settlement in later phases

### Market Dynamics

During coverage phase:

* **Token prices fluctuate** based on perceived risk
* **Yield accrues** in underlying assets
* **Traders position** for potential claims
* **Liquidity deepens** on Uniswap

### Risk Events

Potential triggers during coverage:

1. Protocol exploits in Aave/Compound
2. Stablecoin depegging events
3. Smart contract vulnerabilities
4. Major market disruptions

### Strategy Considerations

* **Risk Monitoring**: Watch for adverse events
* **Trading Opportunities**: Price volatility increases
* **Hedging**: Adjust senior/junior ratios
* **Yield Farming**: Provide liquidity for fees

## Phase 3: Claims Phase

### Duration: 24 hours (1 day)

### Purpose

Priority redemption period for senior token holders, implementing the dual-tier risk structure.

### Allowed Actions

| Action                 | Permitted     | Details           |
| ---------------------- | ------------- | ----------------- |
| **Senior Redemption**  | ✅ Yes         | Priority access   |
| **Junior Redemption**  | ✅ Limited     | After seniors     |
| **Emergency Withdraw** | ✅ Conditional | If emergency mode |
| **Trade Tokens**       | ✅ Yes         | Market continues  |
| **New Deposits**       | ❌ No          | Closed for cycle  |

### Redemption Priority

```solidity
if (currentPhase == Phase.CLAIMS && emergencyMode) {
    // Only senior tokens can withdraw
    if (juniorAmount > 0) revert OnlySeniorTokensAllowed();
}
```

### Emergency Mode Features

If activated:

1. **Senior Only**: Exclusive senior withdrawals
2. **Asset Choice**: Select aUSDC or cUSDT
3. **Fast Exit**: Immediate processing
4. **Protection**: Safeguard senior holders

### Normal Operations

Without emergency:

* Both token types can withdraw
* Standard proportional distribution
* Market-based pricing continues

### Strategy Considerations

* **Senior Holders**: First claim on assets
* **Junior Holders**: Wait or trade tokens
* **Arbitrageurs**: Price discrepancies
* **Market Makers**: Provide exit liquidity

## Phase 4: Final Claims Phase

### Duration: 24 hours (1 day)

### Purpose

Complete settlement period where all remaining tokens can be redeemed and the cycle concludes.

### Allowed Actions

| Action               | Permitted | Details                   |
| -------------------- | --------- | ------------------------- |
| **All Redemptions**  | ✅ Yes     | Any token combination     |
| **Final Settlement** | ✅ Yes     | Proportional distribution |
| **Trade Tokens**     | ✅ Yes     | Last trading opportunity  |
| **Cycle Reset**      | ⏳ Pending | After phase ends          |
| **New Deposits**     | ❌ No      | Wait for new cycle        |

### Settlement Process

1. **Calculate Remaining Value**

   ```solidity
   uint256 remainingValue = aUSDCBalance + cUSDTBalance;
   ```
2. **Proportional Distribution**

   ```solidity
   uint256 userShare = (userTokens * remainingValue) / totalTokensIssued;
   ```
3. **Final Redemption**
   * All tokens treated equally
   * No more priority claims
   * Clear remaining positions

### Cycle Completion

After 24 hours:

* Phase automatically ends
* Owner can start new cycle
* Fresh deposit phase begins
* New 7-day cycle initiated

## Phase Transitions

### Automatic Transitions

```solidity
function _updatePhaseIfNeeded() internal {
    uint256 timeElapsed = block.timestamp - phaseStartTime;
    
    if (currentPhase == Phase.DEPOSIT && timeElapsed >= DEPOSIT_PHASE_DURATION) {
        currentPhase = Phase.COVERAGE;
        phaseStartTime = block.timestamp;
        emit PhaseTransitioned(uint8(oldPhase), uint8(currentPhase), block.timestamp);
    }
    // ... other transitions
}
```

### Manual Controls

Owner functions for emergency:

* `forcePhaseTransition()`: Trigger time-based transition
* `forcePhaseTransitionImmediate()`: Skip to next phase
* `startNewCycle()`: Begin new 7-day cycle

## Phase Information

### Query Current Phase

```solidity
function getPhaseInfo() external view returns (
    uint8 phase,
    uint256 phaseStart,
    uint256 cycleStart,
    uint256 timeRemaining
)
```

### Phase Constants

```solidity
uint256 private constant DEPOSIT_PHASE_DURATION = 2 days;
uint256 private constant COVERAGE_PHASE_DURATION = 3 days;
uint256 private constant SENIOR_CLAIMS_DURATION = 1 days;
uint256 private constant FINAL_CLAIMS_DURATION = 1 days;
```

## Strategic Timeline

### For Insurance Providers

1. **Day 1-2**: Deposit and receive tokens
2. **Day 3-5**: Monitor coverage, trade if needed
3. **Day 6**: Assess claims, position for redemption
4. **Day 7**: Complete withdrawal or roll to next cycle

### For Traders

1. **Day 1-2**: Establish initial positions
2. **Day 3-5**: Active trading on risk perception
3. **Day 6**: Arbitrage senior/junior spreads
4. **Day 7**: Final exit or accumulation

### For Protocols

1. **Day 1-2**: Deploy treasury funds
2. **Day 3-5**: Coverage active for users
3. **Day 6-7**: Evaluate results and claims
4. **Next Cycle**: Adjust strategy based on outcomes

***

Continue to Getting Started to learn how to participate in the CoverMax Protocol.


---

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