How does DeFi insurance actually work?

Contents

DeFi insurance: what you need to know and how to secure your assets
CONTENT

  • Decentralized insurance – a new stage in the development of the industry

  • Projects offer adverse event insurance coverage

  • There are several factors to consider when choosing DeFi insurance

International consortium of news organizations, developing transparency standards.

Decentralized insurance services protect users from potential losses or problems.

What is DeFi insurance

In traditional insurance, intermediaries prevail. These are mainly large companies such as GEICO, State Farm and Nationwide.

DeFi insurance: what you need to know ...

These companies provide invaluable services to those who wish to insure their homes, cars, savings and even their lives..

DeFi insurance: what you need to know ...

Insurance companies also play a vital role in the traditional insurance landscape.

Decentralized financing has created a need for new forms of insurance. Large cryptocurrency deposits can be stolen or devalued within minutes.

DeFi insurance: what you need to know ...

Smart contracts can contain unexpected errors, making any tools they contain permanently inaccessible. These risks require new forms of insurance.

In addition, the players in the decentralized insurance space are providing democratized versions of traditional insurance. They provide users with protection against adverse outcomes, without involving any large structure in between. Various incentives allow these decentralized insurance platforms to support themselves.

Today, several projects offer DeFi insurance at once: Cover, Mutual, Etherisc, Opyn, which itself was under attack by hackers, and many others. The insurance mechanism is simple – users provide liquidity to cover damage in the event of an insured event, and they themselves receive interest for providing liquidity.

Most recently, BeInCrypto reported that Nexus Mutual is offering centralized cryptocurrency exchanges to hedge against hacks..

What does decentralized finance insure against and how to choose a project

Most of the insurance projects on the market today offer a wide range of services, including insurance against protocol hacking, technical and other errors that can lead to loss of funds, bankruptcy of the issuer of tokens or stablecoins, and many others..

When choosing a project for insurance, experts recommend paying attention to the territorial coverage, services offered, insurance payments and a list of insured events, as well as technical and legal features of the project.

The analytical company Xangle presented a list of insurance projects that may seem interesting and useful to users.

Disclaimer

All information, contained on our website, published in good faith and objectivity, and for informational purposes only. The reader bears the full responsibility for any actions, committed by him on the basis of information, obtained from our website.

Share Article

By admin