Decentralized insurance built on a transparent, blazingly fast, and efficient blockchain with the community in mind is something to think about, says Adam Hofmann, the CEO of Nimble.
Let’s face it – crypto, Web3, blockchain, whatever you want to call it – is growing fast. As a result, there are concerns and skepticism around the volatility and safety of digital assets, including investor funds. Would you put your hard-earned money into anything without some sense of safety and security?
If we are going to be honest with each other, and we certainly should be, it is absolutely logical that companies are skeptical to put big money into a decentralized system.
In both the fast-evolving DeFi space and the “Normalverse,” there is always the risk of hacks or exploits. Enter: decentralized insurance.
“There have been innumerable cases of smart-contracts hacking, cyber-attacks on exchange platforms etc. that have caused huge loss of investor funds,” Blockchain Simplified states on Medium. “Even the magnanimous DAO could not prevent a malware attack on its platform that resulted in loss of billions. Decentralized Insurance has plenty of use-cases that can help prevent such consequences from occurring.”
DeFi Insurance
We can work together to build these preventative use cases. Let’s rethink the traditional insurance cycle for the DeFi world:
When a policyholder buys decentralized digital asset coverage, they are willingly participating in protection of their participation on the blockchain. The purchase of insurance comes from a “pool of money” that has been subsidized by what is traditionally known as insurance providers.
In DeFi language, these “insurance providers” are more appropriately liquidity providers (LP), or Insurance Liquidity Providers. These LPs can be any company or individual who locks their capital into a decentralized risk pool with other similar providers. Coverage can range from digital asset and smart contract risk cover…
