How InsureDAO protects your fund

Why insurance in DeFi space?

The DeFi space has grown significantly.

Many DeFi protocols offer attractive APY return to their users, and people are now dreaming to make huge profits from DeFi. However, as you know, there are substantial risks of losing your fund when you use DeFi. Especially, bugs and exploits are the common risks in the DeFi space.

Through the recent DeFi trend, we have seen a non-negligible number of protocols suffered from smart-contract bugs and hacking. You may lose your entire fund even if you carefully choose and deposit into a protocol, which looks promising with audited smart contracts.

InsureDAO protects your fund

We introduce a peer-to-pool insurance protocol, called InsureDAO, here to protect your fund and to make you feel safe in the DeFi space.

Let’s see the key features for insurance buyers.

・No KYC

InsureDAO is open to anybody. InsureDAO allows anyone to buy insurance products regardless of their age, gender, or country.

・Dynamic Pricing

InsureDAO uses an algorithm to measure risks based on the market’s supply and demand so that insurances are available at a fair price anytime.

・Perpetual Token Reward

InsureDAO provides a token reward to underwriters. As the insurance premium is set by the supply-demand algorithm, the more this token incentive attracts underwriters, the cheaper you can buy insurance.

Let’s do some quick math

The case below describes in a simple manner how you get your fund covered on InsureDAO from any contract exploits.

Any person and any protocol in the following cases are all fictional and not related to an actual person and protocol.

With insurance? Without insurance?

Let’s say there are Alice, Bob and Charlie, who all love DeFi.

They deposit their funds of 10,000 DAI (about $10,000), respectively, into the “protocol XYZ” which offers APY of 20% return and seems secure and promising.

Alice

Alice bought insurance for her entire 10,000 DAI on InsureDAO when she deposited her fund into the protocol, just in case of any unexpected incident. She paid a premium of $500 (5% of the covered amount) for a year-insurance, thereby the total amount of her fund at the moment is as follows.

Alice: $10,000 − $500 = $9,500

Bob

On the other hand, Bob did nothing to protect his fund since he thought the protocol is safe. So his fund at the moment is as below,

Bob: $10,000

and if nothing happened, he would get his entire fund back and obtain additional some APY return from the protocol.

Charlie

As for Charlie, he was not interested in insurance as well as Bob at first.

A few months passed, however, he changed his mind and bought insurance on InsureDAO, since he thought the protocol was no longer as solid as before. Then, he paid $1,500 (15% of the covered amount) for a year-insurance for his 10,000 DAI.

The premium became more expensive than Alice had paid, as dynamic pricing reflects an increasing demand for the “Protocol XYZ”. So his fund at the moment is following,

Charlie: $10,000 − $1,500 = $8,500

Almost a year after their entry

Unfortunately, the “Protocol XYZ” is hacked and the whole amount of deposited funds have gone to an anonymous heist. Of course, Alice and Charlie have nothing to worry about the incident since they will be fully reimbursed for their losses from InsureDAO, while Bob ends up losing his initial fund entirely.

As a result, after the incident, their total amount of fund are respectively as follows.

Alice: $10,000 − $500 + $2,000 = $11,500 (+$1,500)

Bob:$2,000 (−$8,000)

Charlie: $10,000 − $1,500 + $2,000 = $10,500

DeFi shapes the Future of Finance, but it is still an insecure space.

All of a sudden, even some admirable DeFi protocols could be exploited.

So, if you want to keep exploring the frontier in DeFi,

let’s protect your fund with InsureDAO!

About InsureDAO

If you are interested, you can learn details on Whitepaper

https://www.insuredao.fi/

Also, you can join us on Twitter or Discord! :)

Twitter: https://twitter.com/insuredao

Discord: discord.gg/8BA5f5rurq

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