Solace: The DeFi Insurance Of The Future
Decentralized Finance (DeFi) insurance is developing, much like the rest of the DeFi space. However, Solace is powering through with a reimagined portfolio security solution that helps users navigate the ecosystem more confidently. This article dives into Solace, its refreshingly unique value to DeFi users, and core features for more comprehensive and economical insurance for your DeFi portfolios.
Solace: Making DeFi A Safer Choice
The boom of DeFi came with obvious growing pains. In 2020, approximately $150 million was lost to hackers. Fast forward to 2021, that amount blew up to $1.3 billion, and in 2022, two of the biggest attacks in terms of financial loss (Ronin and Wormhole) occurred. As exponentially profitable as DeFi is, it is still new, largely not battle-tested, and risky. Security stands out as a fundamental need for protocols, users, and their portfolios. Hence, the birth of decentralized insurance.
Solace is a decentralized insurance protocol that provides portfolio coverages for individuals, protocols, and DAOs across multiple chains. Positioned as an alternative to traditional DeFi insurance, Solace delivers an encompassing solution that tackles the challenges of existing offerings, such as:
- ineffective risk assessment
- inefficiency in the processing of claims and determining financial loss
- expensive and limited nature of stack cover
- knowing who is the underwriter and securing capital
Solace Portfolio Coverage (SPI): A Game Changer For Users
For most DeFi insurance products, the usual offering required users to buy coverage for each DeFi position across different protocols (stacked cover). This stacked approach is not only expensive but offers a limiting alternative that forces users to choose which portfolios are worth covering if they are to cut down on the cost, basically pushing the burden of risk assessment on them. In addition, stacked coverage is offered at a fixed price and for a fixed time without considering the dynamic nature of crypto portfolios, making it an inflexible approach to DeFi insurance.
Solace Portfolio Coverage (formerly Solace Wallet Coverage) is a unique proposition by Solace, which allows users to insure all their DeFi positions across multiple protocols with single coverage. In addition, it offers a more economical premium thanks to a dynamic and open risk rating engine that assesses risk by aggregation based on the protocol category (lending, AMM, DEX, Derivative) and is tailored to respond to the position changes of the user’s portfolio. SPI uses a pay-as-you-go approach that charges users based on their portfolio’s risk score (calculated using risk rating engine). What’s more, with SPI, your premium is calculated daily, weekly, or yearly and is relative to the risk and positions of your portfolio, meaning you only pay for the cover you use.
A single coverage (SPI) that insures your positions and portfolio across multiple protocols and chains means you don’t have to deal with the hassle of figuring out risk assessment or weighing costs. Solace provides policies for:
- re-entry attacks
- minting vulnerability
- trojan fake tokens
- flash loan attacks
- math error
- proxy manipulation
Solace’s coverage is available for Aurora, Ethereum, Fantom, and Polygon chain users.
Bond and stake
Users can bond their assets to Solace to further secure and provide liquidity for the platform. You can choose which asset to bond through a quick four-step process and receive $SOLACE tokens in exchange. After successfully bonding an asset, you can stake the received $SOLACE tokens on the platform for rewards. The rewards come from token emissions and policy sales. The tokens also have a governance use case as a voting chip in the Solace DAO.
Solace makes public and accessible its risk rating and assessment model, risk data, and pricing to maintain complete transparency. In addition, Solace has decentralized storage on IPFS, and users can always get involved with the decision-making and direction of the protocol by bonding and becoming members of the DAO.
Solace’s user-first approach to DeFi insurance takes the weight of risk assessment from your shoulders, allowing you to feel more secure about your investments with a tailor-made and responsive single-point coverage.
Solace is a decentralized insurance protocol that offers a personalized coverage product that allows you to insure portfolio position on over 200 DeFi protocols and multiple chains.