Need-to-Know DeFi Developments
The Intelligent Insurer #13 — DeFi developments and how to protect against unnecessary risk
Decentralized Finance (DeFi) continues to grow, setting new record highs for the Total Value Locked (TVL) in DeFi protocols. DeFi assets are quickly rising to rank among the top echelon of crypto assets in terms of market capitalization.
Growth for the majority of the largest DeFi protocols has experienced a bout of stagnation in recent trading. However, an extraordinary appreciation in few outperforming DeFi assets has outsized this stagnation and resulted in significant growth for DeFi overall.
In the latest release of the Intelligent Insurer, we detail some of the major events in the DeFi sector that have led to the exceptional growth in TVL. We also highlight how DeFi investors can protect their downside by insuring against unnecessary risks.
Binance Smart Chain Projects Lead the Pack
According to data from DeFi Llama, the TVL in DeFi at the time of writing is over $82 billion. This is the accumulated value of over 140 different projects.
The largest of these is Wrapped Bitcoin (WBTC), whose TVL at the time of writing is $8.28 billion. However, the recent growth in DeFi TVL has been largely attributable to a capital inflow into projects built upon the Binance Smart Chain (BSC).
PancakeSwap, one of the projects built on BSC, saw $1.3 billion flow into its TVL over the past seven days. It is currently ranked 4th among all DeFi protocols in terms of TVL. Over the same period, Yearn Finance and Vespar experienced a capital inflow of $850 million and $840 million respectively.
Trading volume in the DeFi market has also spiked. The launch of DELTA on Uniswap spurred a significant jump in trading activity. Moments after the launch, the trading volume of Uniswap jumped by 450%, bringing the 24-hour trading volume to over $12 billion.
In another event, the decentralized lending platform Liquity raised $6 million in a series A investment round. Liquidity’s founder noted that the funds would allow his team to continue their mission of improving access to on-chain borrowing, removing interest rates, and minimizing governance in DeFi.
Greater liquidity, heightened trading volume, and fundraising rounds are all a sign of the DeFi ecosystem maturity. However, the ecosystem is still in a stage of rapid evolution which exposes DeFi speculators to a myriad of risks. Protecting against unnecessary risk will be critical for those speculators that intend to outperform the market long-term.
Minimizing Downside with Digital Asset Insurance
The emergence of digital asset insurance solutions is a game-changer for crypto investors. Opium, Unslashed, Cover Protocol, and Nexus Mutual are some of the early insurance solutions that can provide a modicum of protection in the DeFi market.
However, the insurance offerings of the above-mentioned protocols are ultimately limited and restricted. They offer a standardized insurance offering that fails to provide tailored protection for the unique holdings of most digital asset holders. DeFi investors need a more comprehensive solution to cover against the countless risks of the quickly changing DeFi ecosystem.
Insured Finance is one insurance option that allows DeFi investors to secure coverage that is specific to their holdings. Insured Finance users can secure customized insurance from a peer-to-peer marketplace that is built upon the Polkadot blockchain.
Greater capital is flowing into DeFi and the wider cryptocurrency market but risks remain. Insured Finance allows DeFi investors to protect against unnecessary risks, while still benefiting from the growth in the market.
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.