[AIP-27] Alpaca Insurance Plan Update

ith the upcoming change to the Government Vault (AIP-24), there could be an impact on behavior of stakers with the new locking / unlocking mechanism. We want to make the community aware of these potential dynamics and decide whether to make any adjustment to the insurance plan.

Rationale The Alpaca Insurance plan funds the coverage through the portion of the protocol revenue that would go to the Governance Vault stakers. As it would currently work, if there is a large amount on the insurance plan to be paid, the first order effect would likely be for some users to unlock and sell ALPACA due to the anticipated lower yields.

Please note that this is different from the old format because with the new Governance Vault staking format, users only require 21 days to unlock.

The above effect will continue until the new equilibrium is reached, which would likely be a lower staked APR% and selling pressure on ALPACA from people who exited their positions.

Execution We list below potential approaches we can take as a basis to kick-start the community discussion

Keep the plan as is Leave the plan as is and let the market force plays out if insurance plan is activated