The DeFi ecosystem continues to progress and disrupt the traditional world of finance. Its decentralization, with its permissionless nature and high accessibility, attracts a multitude of investors. Unfortunately, along with the disruptive advantages, hacks and exploits are inherent to the complexity of DeFi, costing the crypto community over $1 billion in 2021. Avenues for protecting digital assets against the risk of smart contract failures, custodian hacks, rug pulls, and the like are emerging quickly. Bright Union is aggregating and accelerating decentralized Insurance solutions, paving the way for mass DeFi coverage adoption.
What is DeFi insurance?
Similar to traditional insurance, DeFi insurance protects crypto holders against risks in return for premiums. Instead of being governed by an insurer, premiums and payouts are decentrally determined. By providing capital to a risk pool, you can earn the insurance fees by being exposed to risk.
Cover protocols entering this insurance market are making the developing DeFi space a safer place to navigate, lowering entry barriers for both newcomers and institutions.
Rise of crypto coverage
Crypto coverage bridges a much-needed gap for users, allowing them to take out covers to protect themselves against specific catastrophic risks to which they would otherwise be vulnerable. These cover providers allow users to avoid an extreme loss of funds due to protocol hacks or smart contract failures.
Currently, the most popular cover is from first-mover Nexus Mutual, an Ethereum-based cover provider. With more than $100 million active cover amount, the Curve cover is the favorite, enabling users to swap stable coins securely. Nexus Mutual’s capital pool has experienced steady growth over the past year, and its governance token is finally closing down on the top 100 cryptocurrencies. Since its launch, Nexus Mutual has accumulated a total of $400 million in total covers protecting users against a range of risks.
Similarly, InsurAce, one of the more emergent players, has been stealing the show recently, despite only launching in May this year. The platform’s unique multi-chain architecture gives users the ability to select between the BSC, Polygon, and Avalanche next to the Ethereum blockchain, tackling the high gas fees attached to the Ethereum network.
InsurAce Protocol has consistently doubled its active cover amount every two months since its mainnet launch in May 2021. (Insurace.io)
Terra’s savings protocol, Anchor, is currently the most popular InsurAce cover, amounting to $7.3 million in active covers. Anchor investors cover against unlikely adversity while receiving an impressive 20% APY on Tether (USDT) lending. Moving towards coverage for multi-chain networks will improve accessibility and broaden the market for DeFi coverage on protocols beyond Ethereum.
Bridge Mutual, another insurance protocol, allows insurer users the unique capability of providing coverage by staking stablecoins, adding an extra layer of safety. Derivatives protocols Alpha and Barn Bridge are among the most popular cover options here. These two protocols enable users to hedge against price instability or use leverage to increase exposure further. The Alpha Homora product lets DeFi users leverage their yield farming portfolios up to 2.5 times. Risky behavior simply attracts insurance protection. Just like how most wingsuit flyers choose the best insurance, crypto coverage can act as a useful safety net when opening leveraged positions.
Aggregating Crypto Coverage
Growing demand for coverage emphasizes the call for comprehensive DeFi coverage solutions. Positioned as the 1inch for risk coverage products, Bright Union is making sense of crypto market risks. By partnering with leading coverage protocols, Bright Union provides an integrated service that improves access and simplifies risk management for a range of users.
As a risk aggregator, Bright Union makes coverage transparent and easy, and adds value, driving the market forward. Users can find, compare and select covers from all over the industry, from a simplified interface. DeFi funds enjoy portfolio-based insurance products, while protocols and wallets can easily integrate the DeFi insurance landscape by integrating the Bright SDK.
Bright Union offers the lowest cover price
The possibilities for users, developers and investors in the DeFi space are endless, although accompanied by inherent risks. As demand for DeFi expands, many are reluctant due to lack of regulation, protocol failures and hacks. Coverage takes down the threshold for new users. Investors now have the potential to fearlessly benefit from what the space offers.
Together with current partners Nexus Mutual, InsurAce, and Bridge Mutual, Bright Union is aggregating 150+ coverage solutions and accelerating adoption, making safely navigating DeFi accessible for the community of users. Besides the enormous range, Bright Union also sells the cheapest DeFi covers in the market, due to the multi-chain infrastructure and a cashback program in collaboration with InsurAce. Find those suitable covers to protect your digital asset portfolio on app.brightunion.io.
Bright Union offers the cheapest DeFi covers in the market. Source: app.brightunion.io.
“With $1 Billion lost, hacks and exploits are among the biggest problems in DeFi. We believe that, just like insurance in the real world, DeFi insurance will grow exponentially and we are looking to play a pivotal role in achieving mass adoption, facilitating the crypto community safe navigation through the DeFi space.” - Jorrit Kooi, CEO Bright Union
Learn more about Bright Union