Last week’s Poly Network $600-million hack was one of the biggest heists in the history of crypto markets. The good thing was the hackers decided to return the funds back to the network.
But this clearly goes to show the gaps that bad actors can exploit in the rapidly emerging DeFi market. As per data from CipherTrace nearly 75% of all threats happening in the crypto space are concentrated towards DeFi.
Finding the right market opportunity here, a decentralized insurance platform Unslashed is looking to offer protection to crypto users from such losses. The goal is to shield investors from the losses resulting from smart contract hacks, exchange failures, or any other way. Paris-based Marouane Hajji, the brain behind Unslashed told Forbes:
“[Insurance is] perceived as not super sexy, whereas it’s really the bedrock on which everything else is built. It’s of paramount importance for banking, trade, international commerce, anything in finance really, relies on insurance.”
With a massive $80 billion locked in the DeFi, the importance of insurance remains higher than ever before. Unslashed had a private launch earlier this year in February 2021. Since then, it has sold policies to a few good players.
For e.g. crypto staking protocol Lido purchases Unslashed insurance coverage for protecting $200 million worth of staked Ether. Some of Unslashed’s other customers include Kyber Network and decentralized exchange aggregator Paraswap.
Creating Capital Buckets With 24% Yield
To finance these policies, Unslashed has created “capital buckets” which is nothing but a collection of insurance policies that are “designed, assessed, priced, and grouped for investors”.
So far, the Unslashed decentralized protocol is offering 30 policies with 4000 investors offering nearly 300,000 ETH or ~$800 million worth of insurance coverage. The Unslashed team has also developed its own risk models.
Besides, the Unslashed team has also developed some risk models. Its existing capital bucket aka the “Spartan Bucket” will allow insurers to offer capital at the lowest risk policies. Interestingly, Unslashed has been able to offer insurers a staggering 24% yield. As per Hajji, the protocol is working on offering two more buckets having progressively riskier policies.
Enzyme Finance – Putting the Capital At Work
To deliver such a high yield, Unslashed puts the capital to work through a decentralized asset management platform Enzyme Finance. Mona El Isa, Founder of Enzyme Finance, said:
“With a few quick clicks you can think about [compare] strategies from automated market maker pools, to lending, to borrowing to farming strategies, because of all of our native integrations”.
The Unslashed DAO has its own native token USF. This serves as a tool for all decision-making for asset management and forming investment strategies. Out of 86 million USF tokens, half are with DAO and the other half are distributed among the development team, early investors, and the Unslashed Foundation. Currently, the USF tokens only serve as a tool for executing voting rights. However, the DAO is discussing other applications for it.
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