Smart contracts, which are an invaluable part of the booming #blockchain industry, face risks of bugs and hacks. In the past, people have lost millions of dollars due to smart contracts vulnerability. The use-cases of smart contracts aren’t limited and are only growing, but the risks are affecting the potential growth of smart contracts. Several platforms are working to fix these issues by applying DeFi insurance protocols. DeFi insurance is the best option that provides coverage on anything from wallets to smart contracts.
Following are some of the top DeFi insurance tokens in the industry-
InsurAce.io is a leading decentralized multi-chain insurance protocol, providing reliable, robust and secure insurance services to DeFi users, allowing them to secure their investment funds against various risks.
With InsurAce.io, users are able to enjoy:
- Unbeatable Low Cover Premiums
- Cross-chain Coverage
- Multi-chain Accessibility
- Sustainable Investment Returns (Investment Portal and Mining Program)
Since launched in April 2021, InsurAce.io currently has a live product deployed on Ethereum and Binance Smart Chain (BSC), and has built a full-spectrum cross-chain insurance product line, covering 50+ protocols, 4 CEX and 1 IDO platform running on Ethereum, Solana, BSC, Heco, Polygon, Fantom, Terra and ThorChain.
We respect all the DeFi insurance pioneers and do not consider ourselves as a competitor to the existing players, but a necessary complementary role to the immense and expansive DeFi world.
InsurAce.io started with an initiative to establish a decentralized protocol that safeguards blockchain users’ activities with insurance-like protection. Inspired by the early pioneers of DeFi insurance platforms and their product designs, we came up with the portfolio-based approach that maximizes value creation for end-users. While existing protocols build their foundations based on capital adequacy and consolidation, InsurAce.io advocates the practice of freeing up the limitations and brings about better capital utilization.
Decentralized Finance (DeFi), also referred to as ‘open finance’, is the ecosystem of financial applications developed on top of blockchain and distributed ledger systems. It’s also referred to as ‘Lego of Finance’ where ordinary people can use smart contract to create a new finance world which given people quicker access to services and activities like: payments, lending, borrowing, funding, or investing. With the blooming of DeFi ecosystem, DeFi player is creating more and more wealth and stakes. Insurance, the stabilizer of the finance system, arrives at a slower pace. According to the data from DeFi Pulse, only three notable insurance protocols are available out of the 100 major DeFi projects been selected, i.e., the Nexus Mutual, Opyn, and Augur.
Distribution of DeFi Projects
Nevertheless, the overall coverage by the existing insurance projects of DeFi TVL is deficient. According to Nexus Mutual, the peak asset value covered is US$246M, which is merely around 2% of all assets across the landscape.
TVL in DeFi Covered (Jul 2019 ~ Dec 2020)
We discovered opportunities with that size of market vacancies and scarcity of successful players. Despite the development of existing DeFi insurance projects, we note that mutual is still the mainstream of DeFi insurance. However, there are still a few common issues that need to be addressed.
Deficient Product Accessibility
There are some limitations on product accessibility for existing products, such as:
- High premium: especially for the protocols with less staked pool;
- KYC-based membership: which contradicts the free and open ethos of DeFi;
- Limited cover capacity: which often frustrates customers when they need to buy covers for their intending protocols;
- Lack of coverage for new protocols: which is often lagged behind the industry pace and unable to support the latest protocols;
- No cross-chain coverage: which limits the protection capability to DeFi protocols on other public chains;
- Lack of protection diversity: which is limited to cybersecurity protection only compared to the broad coverage of risk types in traditional insurance landscape;
Inadequate Risk Management
Risk management lies at the core of any insurance business. However, current DeFi insurance products still have much room to enhance their risk control capabilities, such as:
- Cybersecurity: programmatic/logical flaw of Insurance protocol
- Concentration risk: the capital pool is often highly concentrated on a few major protocols, and the platform is solely relying on Ethereum;
- Claim assessment: the existing claim assessment is handled grossly with a Yes/No judgment only, without quantified evaluation of the loss;
- Risk evaluation: operational/market/credit risks are not well evaluated or taken into account for the platform design and operations.
Capital Inefficiency
Capital efficiency constitutes the cornerstone for any insurance company, which benefits both the insurers and the insured systematically. However, low capital efficiency is another pain point for existing DeFi insurance products, such as:
- Low reserve utilization: the capital injected into the insurance platform is often not well managed, leading to the low utilization of the reserved fund, which can be employed delicately;
- Unsustainable investment return: Like traditional insurance businesses, customers expect to gain sustainable investment return on the money they place into the insurance company.
We have seen the market demand for more insurance projects to enhance the risk management infrastructure of the DeFi ecosystem and seek improvements to address the challenges mentioned earlier. Therefore, we propose this solution, the InsurAce.io, with core value creations.
Nexus Mutual-NXM Token:
Nexus Mutual is a risk-sharing platform that allows anyone to purchase insurance coverage. The platform is working to bring the power from large insurance companies back to the individuals, which was the original concept of insurance.
NXM is the native token of Nexus Mutual. It represents the membership rights of an individual in Nexus Mutual. It enables the users to participate in the ecosystem through risk assessment, governance and claim assessment. Funds raised from the token belong to members. The token model of NXM leverages the continuous token model.
Minimum Capital Requirement is the significant component that influences the pricing and redemption conditions of the token. The following two factors drive the price of NXM token:
How much capital Mutual platform has acquired
How much capital Nexus Mutual needs to meet the demand of all claims within the specific duration
The more capital in the Mutual, the higher the NXM token price will be. Users can easily purchase and redeem NXM from the Mutual platform.
Use Cases of NXM Token
NXM token is the asset required for gaining membership in the Nexus Mutual. It is widely used for multiple mechanisms. Only members can hold and use NXM token.
Purchase a Cover:
Users can become part of Nexus Mutual by purchasing a cover. Nexus Mutual allows users to buy cover in ETH and DAI, which is then automatically converted to NXM by the system. After purchasing a cover, a member burns 90% of the cover price of NXM tokens, and the remaining 10% is used to make a claim.
Governance:
The predominant role of the NXM token is its role in the governance of Nexus Mutual. The NXM token is the voting weight in governance. You can earn NXM by participating in governance. The NXM used for voting in the governance is locked for a certain period with the transaction restriction.
Risk Assessment:
User can stake NXM to show their confidence in the security of the underlying smart contract in the risk assessment of a cover. The price of cover relates inversely to the number of NXM token staked. The more NXM staked, the lower the cost of the cover. The stakers receives NXM when the cover is purchased. If a valid claim appears within 250 days from buying a cover, a part of the staking is burned.
Claim Assessment:
Users can stake to vote on claim assessment to decide whether a claim should be paid or not. Members are rewarded with NXM when they vote with consensus, while those who vote against consensus get their tokens locked for a certain period.
The staking of the users burnt, who try to vote fraudulently, will be kicked off from the platform.
At the time of writing, the price of NXM is $102.28. The current CoinMarketCap ranking is #218.
Source: https://coinmarketcap.com/currencies/nxm/
Etherisc – DIP Token:
Etherisc is a decentralized insurance platform that allows anyone to create their products using the Ethereum blockchain. It offers a range of insurances. The platform is based on open-source smart contracts that provide transparency and trust. Etherisc uses a DIP utility token for transactions.
The DIP token is an integral part of the Etherisc. The token usage is free, and the token owner does not receive revenue from the use of the platform.
The DIP token is created to bind the participants to the platform of Etherisc and to assure the quality of the service. Users can purchase insurance using the token. DIP is the universal currency to buy insurance products on the Etherisc platform.
The risk model of the Etherisc is awarded according to the predetermined benchmark, which usually stays with the party running risk pool. DIP token is used for staking and for giving rewards for providing or updating the risk models.
Decentralized insurance works efficiently to manage the data of its users. In the decentralized space, users can offer their data to a data pool in return and get rewards in DIP tokens. These tokens are awarded for providing reliable oracles.
Sales agents in decentralized spaces can offer insurance products to business or end customer for a profit share. DIP token is used as a reward for the distribution of products and can be used to distribute revenue and profits.
DIP token is awarded as an incentive to start biding on the prediction market. DIP token can be staked to provide capital for a licensed provider and pay the license fees. It can be used for giving a reward for the services and a fee for using the application.
The DIP token is a protocol token that underlies a network. It performs all kinds of tasks depending on the platform it backs. It also enables the economy on the network where participants cooperate to build insurance.
With the DIP token, Etherisc allows to:
- Stake token as collateral
- Buy insurance products
- Cooperate with another participant to build decentralized insurance products
- Pay the fee to obtain the insurance license
- Incentivize quality behaviour
- Distribute profits and revenues among participants.
- Pay oracles and prediction markets to resolve the claim
- Reward data provision by users.
At the time of writing, the Etherisc DIP token price is $0.166092.
Source: https://www.coingecko.com/en/coins/etherisc
Carbon Dollar X-CDX Token:
CDx is a platform that offers insurance swaps that are tradeable tokens. It enables the investors to protect their assets from hackers on the popular decentralized insurances exchanges.
These CDX swaps can be used for various purposes, including trading for profits, betting against exchange security and protecting crypto assets etc. It is an asset-backed security token providing confidence of stability and actual market value.
Source: https://crypto.com/price/cdx-network
InSure Defi-Sure Token:
InSure Defi is a community-driven crypto asset insurance ecosystem that allows users to insure their crypto portfolio. It is the world first Defi insurance system with staking power. Users can buy insurance with a Sure token that can be purchased with crypto or fiat currency. It is designed to distribute crypto ownership risks among a liquidity pool. The insurance premium is determined by a Dynamic Pricing model based on Chainlink.
The price of SURE Token determines the capital required to back the risks and community demand for a crypto portfolio.
The committee members of InSure have the power to punish the bad actors claiming false claims by burning their Sure tokens. The token holders are not forced to sell their tokens; they can also sell them to other investors who need insurance for the crypto portfolio. It uses a 3-phase voting system for the claim assessment.
Source: https://www.coingecko.com/en/coins/insure-defi
The Bottom Line:
There are several Defi insurance tokens with their specific offerings. Among the above, NXM is the best Defi insurance token that is decentralized, provides insurance for smart contracts, with a risk pool and Ethereum main-net system.
Other Defi Insurance tokens are:
MDS token from Medishare mutual insurance marketplace that uses smart contracts to connect users looking for insurance services. It does not require KYC.
PAL tokens by PAL network.
Defi insurance is a million dollars industry that provides potential solutions with increasing use cases. Defi insurance will soon be one of the flourishing sectors in the crypto space.
InsurAce platform is a permissionless, blockchain-based Defi insurance service. InsurAce provides insurance for your smart contracts against hacks enabling users to secure their investments.
Visit now to get insurance for your smart contracts! InsurAce
