Kyber Network and Unslashed Finance partner over a $20m Native Insurance to protect Kyber Network and DMM users
Kyber Network is now offering the first Natively Insured Pools for the Dynamic Market Maker (DMM) protocol! The policy acquired by Kyber covers up to $20m (10,000 ETH) and is focused on smart-contract risk.
Kyber has made the decision to purchase bulk insurance for the DMM, covering all liquidity providers and market-makers. In doing so, Kyber demonstrates the importance of combining the transparency of self-custody and smart-contract audits with insurance as an additional layer to mitigate risk for users.
Kyber’s Commitment to Security
Kyber Network recently launched the Dynamic Market Maker (DMM), an innovative, next-gen AMM designed to optimise fees and enable extremely high capital efficiency for liquidity providers.
Kyber was one of the earliest DeFi protocols focused since 2017 on providing seamless onchain liquidity through an open reserve architecture. Kyber has always maintained a high standard of smart contract security, and its liquidity infrastructure has facilitated close to $5 Billion worth of trading volume for thousands of users, while managing more than 50 reserves and being integrated to over 100 decentralised applications.
DMM is a new major protocol that will be added to Kyber 3.0’s liquidity hub and provides important benefits to DeFi liquidity providers, including extremely high capital efficiency, as well as fully permissionless liquidity contribution from anyone and access to liquidity by any Dapp, aggregator, and end user.
Smart-contracts can be subject to different types of attacks, many of which exploit vulnerabilities in the smart-contract’s code. The losses resulting from technical issues with smart-contracts which could be either code vulnerabilities, errors or omissions in code implementation, or unavailability or failure to access or process deposited funds, is one of the main risks in DeFi, sometimes resulting in losses for users. Currently, if an event were to occur involving one or several smart-contracts, LPs and market-makers might be impacted and they might suffer losses.
The Kyber DMM codebase has been reviewed and audited multiple times by both the team and external auditors, and remains open source on Github for community developers to review. But as an additional safeguard and a sign of commitment towards security, Kyber has also purchased cover from Unslashed for its users!
The Unslashed and Kyber teams collaborated on this policy that will cover about $20m of user funds. Should an event occur, the claim on their policy will cover their users from any potential losses. This way, the new Kyber DMM protocol is able to achieve a high level of security and reliability.
Insurance as a competitive advantage
The status quo within the DeFi insurance industry has been to allow users to buy and handle their own coverage. Historically, protocols have put the burden on their users to insure themselves. When this happens, it is the user who ends up footing the bill, not the protocol.
The purchase of bulk insurance for its users by Kyber Network is another step in the right direction.
It offers significant benefits to Kyber in several ways:
- It provides a smoother experience for users and fosters inclusivity
- It builds trust between Kyber and its users and demonstrates how important protecting its users really is
- It sets the precedent that insurance is a must-have
We are convinced that other projects will follow and take the initiative to purchase coverage for their users to help transform the current insurance landscape into one that offers inclusion and safety for users across the board.
This partnership is just a step towards that goal. We will continue to push the boundaries of decentralised insurance and enable other projects to protect themselves and their users’ funds.
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