Capacity and policy

Insurance capacity is a collateral input. If capacity is thin, stale, generic, or already reserved for another event, it should compress risk appetite. It should not be treated as a comforting label attached to an LRT.

This page does not assign numeric parameters. Lyrasing has no deployed market, active LTV table, liquidation threshold, loop-depth parameter, supported collateral list, insurance contract, active reserve, or oracle implementation in this repository.

Capacity inputs

Capacity review should answer:

Input	Policy question
Available balance	How much capacity exists before pending claims, reserves, fees, or backstop conditions?
Allocated surface	Which AVS, operator set, vault, strategy, withdrawal state, or LRT collateral variant can draw from it?
Seniority	Is the capacity senior to protocol reserves, junior to borrower collateral, or shared with another loss layer?
Correlation	Can one incident consume capacity for several collateral assets at once?
Pending claims	Is part of the pool reserved while evidence, veto, settlement, or reconciliation is unresolved?
Replenishment path	Which future fees or capital sources rebuild capacity after payout?
Withdrawal or expiry	Can external backstop capital leave, expire, or be reduced during stress?
Freshness	When was the capacity snapshot taken, and who can update it?

The capacity record should be evaluated at the same cadence as AVS exposure and LRT collateral records. Stale capacity is not coverage.

Policy levers

Thin capacity should affect multiple levers:

Lever	Capacity effect
Borrow cap	Compress when insured loss could exceed allocated capacity.
Supply cap	Prevent the collateral class from growing faster than coverage and liquidation capacity.
LTV posture	Lower when insurance is generic, depleted, pending, or unmapped to the slash surface.
Liquidation threshold posture	Account for delayed settlement, queue timing, and expected recovery value.
Looping limit	Compress faster than base LTV because recursive positions reuse the same coverage.
Admission status	Delay or reject candidates whose risk case depends on unavailable insurance.
Review cadence	Shorten when capacity, operator sets, vault epochs, or slash conditions can change quickly.

Insurance should never be the only reason an asset qualifies for aggressive LTV. It can support a policy argument only after backing, liquidity, oracle units, timing, and AVS exposure are already reviewable.

Capacity bands

Use qualitative bands until an implementation exists:

Band	Meaning	Policy posture
Mapped	Capacity is assigned to a defined slash surface and current enough to inform policy.	Can support normal review, still with caps and stress tests.
Thin	Capacity exists but is small relative to possible open exposure.	Compress caps and looping; shorten review cadence.
Shared	Several surfaces can claim the same pool.	Allocate capacity before counting it for any one LRT.
Pending	Capacity is reserved for unresolved evidence or delayed settlement.	Treat as unavailable for new leverage until resolved.
Depleted	A payout or drawdown consumed the relevant capacity.	Pause or materially compress new exposure.
Unmapped	Reserve exists in name but not for the relevant slash surface.	Do not count as insurance support.

These bands should feed the LTV adjustments and risk tiers language. They are not hidden numbers.

Pause, delisting, and review triggers

Capacity changes should trigger policy review:

Trigger	Conservative action
Insurance payout	Recalculate capacity bands, reduce caps, and review related collateral.
Pending slash claim	Reserve capacity and limit new leverage on affected surfaces.
Capacity falls below open exposure	Compress borrow and supply caps before LTV precision.
External backstop notice or expiry	Stop counting the backstop after the notice boundary.
Operator-set or vault change	Re-map coverage to the new exposure surface.
Veto, appeal, or settlement delay lengthens	Treat capacity as pending longer and tighten looping.
Coverage exclusion changes	Re-review every asset whose LTV case depended on that coverage.

Pause and delisting language should remain separate from forced liquidation. Future protocol design may include borrow-disable, cap-to-zero, liquidation-only mode, or controlled unwind windows. This page only defines the insurance capacity triggers that should start that review.

Looping-specific posture

Looping can consume the same insurance argument multiple times. If one unit of collateral is supplied, borrowed against, and recursively supplied again, the position amplifies price, liquidity, oracle, timing, and slashing exposure while the insurance pool remains finite.

For that reason, capacity should compress looping before it compresses simple single-supply use. If capacity is thin, shared, pending, or unmapped, the looping posture should move toward low-depth, capped, or no-looping even when the base collateral review is still open.

Source notes

EigenLayer docs support the link between Operator Sets, Unique Stake, redistribution, safety delays, and slashable delegated stake. Symbiotic docs support capture timestamps, vault epochs, withdrawal slashability, VetoSlasher timing, and Burner routing. Lyrasing uses those mechanics to define capacity policy, not to claim active coverage or live integrations.