DeFi is still largely uncharted territory, with multiple challenges needing to be addressed.
With the realization that DeFi's evolution is not limited to one path but rather an infinite array of possibilities, the level of uncertainty has increased.
Skyrocketing valuations and rapidly increasing trading activities have resulted in massive theft of exchanges and online wallets.
Hacks including the PancakeBunny and Alpha Homora Iron Bank exploits impair DeFi's progress because they compound issues decentralized technologies need to overcome to stake their place among mainstream financial solutions.
Now more than ever, a comprehensive DeFi insurance solution is needed to provide practical and democratic coverage to protect future sustained growth and enable strong foundations for a DeFi consolidation.
Introducing Steady State as the benchmark crypto and DeFi insurance protection platform.
Why do we need DeFi Insurance?
According to the security firm AtlasVPN, hacks on DeFi platforms accounted for more than 76% of every major hack worldwide.
The same report discovered DeFi projects lost over $360 million compared to $129 million in 2020. With fraud and hacks causing a combined loss of over $474 million.
In 2021 alone, we have seen a significant rise in hacks that exploit smart contracts and cryptocurrency flaws.
The biggest DeFi hack in 2021 was a flash loan exploit on PancakeBunny, which saw crypto assets worth $45 million lost. This was followed by a hack on Poly Network where $613 million in digital funds was stolen, albeit the attacker restored the funds.
Such examples highlight the importance of DeFi insurance as a tool to protect investments against risks and provide a safety net to users facilitating the use of such services.
Steady State Provides Democratized DeFi Insurance
Steady State is a comprehensive DeFi insurance protocol employing index pools, coverage pools, and an automated smart contract process to secure protocols and protect users from unprecedented risks.
The platform operates in an immutable and transparent manner without the need for an intermediary.
Some of Steady State's main features include:
Coverage Pools
Coverage pools are pools of collateral assets consisting of funds provided by liquidity providers. The funds in these pools stay locked for use as payouts in case of a triggering policy event.
Advantages of coverage pools include token rewards in $RISQ, the focal point of the Steady State ecosystem — and allows users to participate in governance decisions.
Index Pools
Index pools allow users to distribute risk, reduce premium costs and share collateral.
Depositing assets into index pools and spreading funds across multiple policies helps mitigate the impact of significant risk events.
Automated Processes
To minimize human management and reduce system manipulation - Steady State employs an automated process. It uses machine learning algorithms to assess claims and make fair and objective decisions.
When a policy event occurs, smart contracts incorporate on-chain and off-chain data and Chainlink Keepers to validate (or reject) claims.
Risk Analysis Database
Steady State's proprietary and open-source RAD pools together data from exploiting parameters like date of exploit, hack type, cost of digital assets lost in exploit, and market cap.
The data helps understand, assess, and quantify risk via a tracking and aggregation protocol and machine learning algorithm.
Steady State's risk analysis database integrates with various data analytics tools such as Chainlink nodes, MongoDB and Django.
The Future of Decentralized Finance and DeFi Insurance
According to DeFi Pulse, the TVL (total value locked) has achieved over 10x growth in 2021, surpassing $200 billion.
Despite the impressive growth, the number is only a fraction of the total value of the crypto market cap, which currently stands at $2.57 trillion.
As the industry grows and more projects are developed, DeFi insurance presents an opportunity for investors looking to provide themselves and their community with additional confidence.
To encourage sustained DeFi adoption, we need insurance options comparable to those offered by legacy financial institutions. Cryptocurrency presents a unique set of challenges to insurers, which is why Steady State implements an innovative DeFi insurance solution.
To Ensure Sustained Adoption, DeFi needs to Tackle These Risks Now
DeFi can revolutionize how money works in our economies but still lacks key features for mass adoption.
This unfamiliarity presents several risks. Whether through data loss or funds, Steady State provides users and protocols peace of mind against such threats.
If Steady State can provide robust DeFi insurance solutions, both secure and scalable to issues plaguing the financial industry, the global adoption of DeFi is fueled immensely.
This new era of financial innovation has introduced a plethora and gamut of risks for users and protocols alike. As such, it's crucial to have DeFi insurance protecting against risks and pitfalls and cushioning any potential headaches from future adoption of this transformative technology.
About Steady State
Steady State is building a platform to safeguard the assets of DeFi protocols, entities, and their respective users. The platform eliminates bottlenecks prevalent throughout the insurance industry through the use of automated processes, shared coverage policies, a cutting-edge risk analysis database, and Chainlink Keepers. Steady State creates a new paradigm for decentralized insurance by delivering DeFi’s most capital-efficient insurance platform at an entity level. To learn more about Steady State and the impact of our pragmatic approach to Defi insurance, visit us at the links below:
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