> For the complete documentation index, see [llms.txt](https://re0-2.gitbook.io/re-docs-v2/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://re0-2.gitbook.io/re-docs-v2/documentation/core-concepts/insurance-capital-layer-icl.md).

# Insurance Capital Layer (ICL)

Insurance Capital Layers (ICLs) are the core custody vaults that hold user deposits and allocate capital to real-world reinsurance contracts. Think of an ICL as the protocol's on-chain treasury account for a specific risk/return tranche.

### Key Characteristics <a href="#key-characteristics" id="key-characteristics"></a>

| Feature                  | Description                                                                                                                 |
| ------------------------ | --------------------------------------------------------------------------------------------------------------------------- |
| **Dedicated Vault**      | Each ICL has its own Fireblocks storage vault and on-chain vault contract.                                                  |
| **Token Binding**        | One ICL maps to one ERC-20 yield token (reUSD or reUSDe).                                                                   |
| **Daily Sweeps**         | Idle stablecoins sweep into the vault every 24 hours, minimizing smart-contract exposure.                                   |
| **Surplus Note Gateway** | Capital can only exit the ICL after a Surplus Note is signed between Re Protocol and a licensed reinsurer.                  |
| **Transparency**         | Draw-downs and repayments are emitted on-chain between the protocol and reinsurance counterparties.                         |
| **Audit Trail**          | Off-chain balances (trust accounts, operating accounts) are attested daily by The Network Firm and published via Chainlink. |

### How ICLs Fit in the Capital Stack

1. **User Deposits** → Mint a yield token (reUSD or reUSDe).
2. **ICL Vault** → Holds deposits; performs daily Fireblocks sweep.
3. **Surplus Note** → When signed, allows the reinsurer to draw capital up to a pre-agreed limit.
4. **§114 Trust** → For reUSD, funds regulatory collateral; for reUSDe, funds loss reserves.
5. **Yield Accrual** → Capital earns a blended rate: SOFR on off-protocol assets + 7-day trailing sUSDe rate on on-chain assets, plus token-specific spread.
6. **Redemptions & Curve LPs** → Liquidity sourced first from the vault, second from Curve pools.

### Current ICLs <a href="#capital-stack-and-loss-absorption" id="capital-stack-and-loss-absorption"></a>

| Token  | Layer Name     | Risk Profile | Capital Use                                  |
| ------ | -------------- | ------------ | -------------------------------------------- |
| reUSD  | Basis-Plus ICL | Low          | Regulatory collateral in §114 Trust (senior) |
| reUSDe | Alpha ICL      | Medium-High  | Loss reserve for claims (mezzanine)          |