> For the complete documentation index, see [llms.txt](https://docs.tydro.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.tydro.com/iv.-tydro-institutional/institutional-overview/first-loss-capital-and-insurance.md). # First-loss capital & Insurance First-loss capital absorbs losses before other lenders are affected. Tydro lets institutions post it verifiably in markets to provide coverage for their depositors ### How it works A first-loss provider commits capital that sits at the bottom of the loss waterfall. If a covered position takes a loss, the first-loss capital absorbs it before any senior lender or depositor is touched. The coverage is posted on-chain, so depositors can verify it exists and see its size rather than relying on an assurance. For a manager, first-loss capital is how you stand behind your own strategy. By posting it, you give your depositors verifiable protection and, in return, hold the position that carries the higher yield for taking on that risk. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://docs.tydro.com/iv.-tydro-institutional/institutional-overview/first-loss-capital-and-insurance.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.