What Projects are Pushing Innovation in DeFi?

The Intelligent Insurer #56: Need for crypto asset insurance grows as more complex protocols develop

The DeFi space has continued to eliminate the need for middlemen in centralized financial systems, removing hefty intermediary fees. With the fast-paced development of the DeFi sector in recent months, several unique and innovative solutions have sprung up. These DeFi solutions are driving the next wave of development in the space.

In this week’s edition of the Intelligent Insurer, we will look at three highly innovative solutions that are solving some of the biggest problems in DeFi. We will also consider how insurance solutions can play a role in securing investor funds as projects grow more complex. But first, a quick software development update.

Insured Finance software development update

We are very close to launching the Insured Finance mainnet, which will provide our users with a next-gen digital asset insurance platform. Our team is extremely excited for the launch and cannot wait! Given the proximity of our mainnet release, we would like to highlight that this is the final beta testing period for our app, available at the link: https://app.insured.finance/.

If you’re interested in beta testing our platform, please get in touch with our dev team right away. We love engaging with you and discovering your needs, and we hold the community’s feedback in high regard. Get in touch with us today before the beta testing window officially closes!

Over the past week, we continued the rapid progress we’ve been making on our platform. We completed a series of technical upgrades including receiving the API provider’s URL from the Polygon mainnet, and setting up the Polygon mainnet on hardhat config. We firmed up Hotjar integration to capture user behavior analytics and ironed out kinks in the token bridge user experience workflow.

Our preparation for the mainnet release continues unabated. We cannot wait to release the series of improvements and upgrades we have planned for this year and welcome all the feedback you have.

Improved liquidity and uncollateralized loans on Aave

Generally considered a decentralized system of lending pools, Aave intends to provide better liquidity within DeFi markets and allow users to earn more from their staked assets. Aave is an Ethereum-based decentralized lending protocol that allows users to lend, borrow and earn interest on over 20 different Ethereum-based crypto assets.

Network participants deposit the assets they wish to lend into liquidity pools and are given aTokens, which allows lenders to earn interest on deposits. These tokens can then be drawn from the liquidity pools by borrowers, who deposit collateral to take out a loan. While there are several DeFi lending and borrowing platforms in the market, Aave offers some other features that distinguish it from its peers like unique interest rate switching, diverse collateral types, and the absolute favorite among traders, flash loans.

The interest rates on Aave are determined by the pool’s liquidity and the demand to borrow. Therefore, lenders earn more yield when they deposit tokens that the protocol needs as borrowers pay higher interest on those tokens. On the flip side, lenders earn less when depositing tokens that are already in surplus as borrowers pay lower interest on them.

The protocol’s native token $AAVE is a governance token that allows holders to vote on decisions regarding the protocol’s path. It also offers discounted fees for borrowers when used as collateral. There are currently over $12.5 billion assets locked in the Aave protocol.

(Source: DeFi Llama)

Solving interoperability and scalability on Polkadot

Interoperability and scalability have been some of the biggest problems facing the DeFi and digital asset industry. As the market continues to expand and new blockchain networks are launched, Polkadot seeks to connect these separate blockchains into a unified blockchain ecosystem.

Polkadot is an open-source network created to allow several other blockchains to share data and work together on one network. Its goal is to create a “Decentralized Web — Decentralized Network”. By positioning itself as a blockchain for blockchains, Polkadot simplifies the innovation process and gives project developers an established ecosystem to boost their projects. Rather than diverting time, talent, and resources into building competing networks, Polkadot has created an ecosystem for developers to build value on top of multiple blockchains.

The Polkadot ecosystem operates two types of blockchains — the relay chain and parachains. The relay chain is Polkadot’s central chain or main network and transactions here are permanent. Parachains are customized user-created networks that feed into the main blockchain and enjoy the same security benefits enjoyed by the main chain.

The second problem Polkadot tries to solve is scalability and it achieves this goal through its many parachains. These user-created networks carry much of the processing demand for the main relay chain. As a result, the Polkadot network can process over 1,000 transactions per second, and this figure is expected to increase as more parachains come onboard.

The protocol’s native token DOT allows holders to stake and gain the ability to vote on network upgrades, with voting power being proportional to the amount of DOT staked. With a market cap of over $18.7 billion, DOT is currently the 11th largest cryptocurrency in the market.

(Source: CoinMarketCap)

Cross-chain accessibility on Alpha Finance

Alpha Finance was launched to increase investor accessibility to new DeFi projects and products. It is a cross-chain DeFi protocol that features an interoperable structure designed to connect users to various DeFi services, tools, and products. The protocol is designed to mitigate the risks involved in DeFi trading while increasing opportunities to generate massive returns through unique DeFi applications, including Alpha Lending, Alpha Homora, and AlphaX.

Alpha Lending is a pool-based decentralized lending protocol built on the Binance Smart Chain (BSC) network, which allows users to lend and borrow supported assets including BNB. Alpha Homora is a leveraged yield farming and liquidity providing protocol on the Alpha Finance ecosystem, the first of its kind. AlphaX is a non-order book perpetual swapping protocol inspired by Uniswap, which allows users to hedge their yield farming positions. AlphaX allows traders to take leveraged long or short positions of any asset without needing to hold that asset.

The Alpha Finance ecosystem has a native token, ALPHA, which powers operations on the protocol. It also serves as a governance token, giving holders the power to vote on decisions affecting the protocol. Alpha Finance currently has a TVL of over $827 million.

(Source: DeFi Llama)

The DeFi space grows more complex

The DeFi market is only three years old and while its services have exploded over the past three years, the industry is still in the early stages of its development. As the industry continues to grow, more resources become available and the space becomes increasingly complicated for the average user to keep pace with. Although many investors would like to participate in some popular DeFi protocols, their complexities keep these investors away.

Additionally, security is one of the major problems that DeFi investors grapple with every day. The rapid growth of the industry has also made it a prime target for hackers and even the most prestigious protocols fall victim to these hacks. To keep their digital assets safe at all times, investors need reliable and secure insurance solutions.

Insured Finance offers users a suite of insurance products that are guaranteed to secure their investments at all times. No matter the cause of loss, Insured Finance users can rest assured their insurance smart contracts will always make them whole.

About Insured Finance

Insured Finance is a decentralized, peer-to-peer insurance marketplace. Users can request customized insurance on a wide variety of digital assets, thereby ensuring full protection. Those fulfilling requests can earn premiums and earn a competitive return on their capital. Claims are fully collateralized and settled instantly.