# Earthquake

Earthquake vaults redefine a core traditional Financial product, catastrophe bonds (CAT), while applying the primitive to a native DeFi setting. A CAT bond is an instrument that pays the issuer when a predefined disaster risk is realized, such as a hurricane or an earthquake. Earthquake uses the CAT bond concept but applies it to a de-peg event for stable coins, liquid wrappers and other derivative products in DeFi.&#x20;

Users can hedge against these assets de-pegging by depositing ETH collateral into the Premium vault and receiving ERC-1155 Y2K([vault-tokens](https://y2k-finance.gitbook.io/y2k-finance/tokenomics/vault-tokens "mention")) in return.&#x20;

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