Evolution of DeFi Insurance Picks Up Pace
The Intelligent Insurer #6 — Insurance innovation never stops.
Over the last few weeks, Decentralized Finance (DeFi) tokens have been outperforming the likes of ETH and BTC. For the first time ever, we saw DeFi tokens enter the top 20 list on CoinGecko. At the time of writing, UNI is getting excitingly close to the top 10, while AAVE occupies the #14 spot. SNX sits at #20.
As DeFi continues to grow rapidly, so does the demand for insurance solutions. Total value locked (TVL) in all DeFi protocols currently exceeds $32 billion, according to DeFi Pulse. With that, there’s a need to protect against events that are, unfortunately, quite common in DeFi. For example, smart contact exploits, rug pulls, stablecoin failures, and centralized exchange hacks, etc.
Luckily, the insurance space is continuously evolving with protocols pushing the limits on innovation. This week, we want to summarize the developments in insurance, from Nexus passing the proposal to invest assets to the progress of the Armor protocol. And, of course, an update on exciting new developments at Insured Finance.
Nexus hitting new milestones
There were plenty of exciting developments at Nexus recently. Active coverage amount is up from $69 million on January 1st to $550 million as of February 3rd.
There was also the first purchase of centralized exchange (CEX) cover on Nexus this week. Someone bought cover for close to $100,000, paying $624 as a premium. CEX cover is a crucial building block for the crypto space as a whole. CEX hacks tend to result in much larger losses than DeFi exploits, with the most recent CEX hack (KuCoin) totalling nearly $281 million.
In yet another Nexus-specific news piece, the community passed proposal #121, which sets the stage for a range of significant upgrades. Some of them are technical, like simplifying bonding curve token price calculations and streamlining infrastructure. However, the most exciting update is the ability for Nexus Mutual to start investing the underlying funds. This is a common practice in the traditional insurance industry, and investment earnings can make up as much as 50% of an insurance company’s total profits. In the case of Nexus, all investment earnings will be going directly to the members.
Insured Finance Goes DeFi
Insured Finance will have the investment arm operating right from the get go. The ability to invest idle funds from insurance agreements will increase the returns that are available to those fulfilling insurance requests.
Insured Finance is also rolling out a suite of DeFi services. Through a partnership with DeFiPie, Insured Finance is bringing both staking and lending to INFI holders. Through a pool on the DeFiPie platform can stake their INFI tokens to earn a return or use them as collateral to borrow other cryptocurrency assets. We are excited to bring more DeFi services to INFI token holders and the broader crypto community.
ArmorFi progress update
Armor is an interesting protocol with a “Pay as You Go and Only Pay What You Owe” coverage system, meaning users pay by the second without lock-ins, allowing them to switch between coverage options easily.
In two days since launch, Armor sold $185 million of coverage with over $1.2M of premiums paid. The team is working on two additional features, Armored Shield Vaults and Smart Cover System, and adding more protocols to its coverage options. It also recently announced an all-star line-up of backers and strategic investors, including Delphi Ventures, DeFiance Capital, and Alameda Research.
Insurance never sleeps
As we see more and more assets locked in various DeFi protocols, the need for insurance solutions is becoming more urgent. DeFi is still a nascent space with a variety of risks, from rug pulls to smart contract exploits.
DeFi insurance protocols have to continuously innovate and push the boundaries of what’s possible to keep up. To that extent, we have seen plenty of exciting developments at several insurance protocols over the last week. We are confident that the innovation will not stop here and are honoured to play our part in the development of the space.
About Insured Finance
Insured Finance is a decentralized, peer-to-peer insurance marketplace. Built on the Polkadot blockchain, Insured Finance users can request customized insurance on a wide variety of digital assets. Those that fulfill requests earn premiums and can earn a competitive return on their capital. Claims are fully collateralized and settled instantly.