> ## Documentation Index
> Fetch the complete documentation index at: https://docs.mithril.fyi/llms.txt
> Use this file to discover all available pages before exploring further.

# Phase 2: Expansion

> Scaling Protection — 10+ New Markets & Community Governance

<Note>
  **1 month after Phase 1.** The hedging engine is proven. Now we scale.
</Note>

## Phase 2 Vision

Phase 1 establishes Mithril with 5 flagship markets. Phase 2 **expands coverage** to 10+ additional protocols, transforming Mithril from a proof-of-concept into **Solana's comprehensive insurance layer**.

***

## Expansion Targets

Phase 2 markets will cover the **next tier** of critical Solana infrastructure:

<CardGroup cols={2}>
  <Card title="Lending Protocols" icon="bank">
    MarginFi, Solend, and emerging lenders. Protect against bad debt cascades.
  </Card>

  <Card title="Perpetual DEXs" icon="chart-candlestick">
    Drift, Zeta, and perp platforms. Hedge against liquidation engine failures.
  </Card>

  <Card title="Liquid Staking" icon="droplet">
    Additional LST providers beyond Sanctum. Diversified staking protection.
  </Card>

  <Card title="Infrastructure" icon="network-wired">
    Bridges, oracles, and critical middleware. Systemic risk coverage.
  </Card>
</CardGroup>

***

## Community-Driven Selection

**Phase 2 introduces governance.** \$MITH holders vote on which protocols get insurance markets:

<Steps>
  <Step title="Nomination Period">
    Community nominates protocols for coverage. Anyone can propose.
  </Step>

  <Step title="Due Diligence">
    Mithril team publishes risk assessments for nominated protocols.
  </Step>

  <Step title="$MITH Voting">
    Token holders vote. Top 10 protocols by vote weight get markets.
  </Step>

  <Step title="Market Deployment">
    Winning protocols receive insurance markets within 2 weeks of vote.
  </Step>
</Steps>

<Info>
  **Why governance?** The community knows where risk lives. \$MITH holders have skin in the game—they'll vote for markets that matter.
</Info>

***

## Enhanced Market Types

Phase 2 introduces **new market structures** beyond simple TVL drops:

| Market Type           | Example                               | Use Case                    |
| --------------------- | ------------------------------------- | --------------------------- |
| **TVL Drop**          | *"Protocol X TVL -50%"*               | General protocol health     |
| **Depeg Events**      | *"Token Y falls below \$0.90"*        | Stablecoin & LST protection |
| **Exploit Markets**   | *"Protocol Z suffers >\$10M exploit"* | Smart contract risk         |
| **Governance Events** | *"Token W inflation vote passes"*     | Tokenomics protection       |

***

## Treasury Scaling

Phase 2 requires expanded treasury operations:

| Allocation          | Phase 1   | Phase 2               |
| ------------------- | --------- | --------------------- |
| Active Markets      | 5         | 15+                   |
| Treasury Deployment | 2% \$MITH | 5% \$MITH             |
| Daily Buyback Rate  | Standard  | 2x (increased volume) |

<Warning>
  Treasury expansion is funded by Phase 1 revenue. No additional token inflation.
</Warning>

***

## Liquidity Mining 2.0

Phase 2 launches **enhanced incentives** for market participants:

<CardGroup cols={2}>
  <Card title="Early Hedger Rewards" icon="gift">
    First 1000 hedgers in new markets earn bonus \$MITH.
  </Card>

  <Card title="LP Incentives" icon="coins">
    Liquidity providers earn yield + \$MITH emissions.
  </Card>

  <Card title="Referral Program" icon="share-nodes">
    Bring new users, earn % of their trading fees in \$MITH.
  </Card>

  <Card title="Governance Rewards" icon="check-to-slot">
    Active voters earn \$MITH for participation.
  </Card>
</CardGroup>

***

## Phase 2 Timeline

| Milestone                 | Target            |
| ------------------------- | ----------------- |
| Phase 1 Completion        | Month 1           |
| Governance Launch         | Month 1 + 1 week  |
| Protocol Nominations      | Month 1 + 2 weeks |
| Community Voting          | Month 1 + 3 weeks |
| Phase 2 Market Deployment | Month 2           |
| Full Phase 2 Operations   | Month 2 + 2 weeks |

***

## Success Metrics

Phase 2 success is measured by:

<CardGroup cols={3}>
  <Card title="TVL Protected" icon="shield">
    Total value of positions hedged via Mithril markets.
  </Card>

  <Card title="Unique Hedgers" icon="users">
    Number of wallets holding YES positions.
  </Card>

  <Card title="Market Volume" icon="chart-line">
    Daily trading volume across all insurance markets.
  </Card>
</CardGroup>

***

## The Road to Phase 3

Phase 2 establishes Mithril as Solana's insurance standard. Phase 3 takes it further.

<Card title="Phase 3: The Future" icon="arrow-right" href="/protocol/phase-3">
  Full ecosystem integration. Cross-chain expansion. The endgame.
</Card>