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Blockchain

How an On-Chain Claim Verification Tool Could Make DeFi Insurance Fair and Hassle-Free

The advent of decentralized finance has proven somewhat successful. Hundreds of projects and protocols compete for traction in a rapidly expanding industry. With billions of dollars locked into DeFi, one can safely assume there is an interest in these opportunities.

Users have increasingly become aware of risks in decentralized finance. Rug pulls, flash loan hacks, smart contract exploits, and other issues remain prevalent with little or no recourse for affected users. So, people have grown more inclined to take out DeFi insurance policies to protect the value of their crypto assets.

However, most DeFi insurers don’t have an effective way to manage claims disputes on-chain. If a user makes a false or fraudulent claim, insurers often struggle to assess its validity.

Users who have taken out a DeFi insurance to protect the value of their assets could make a claim on the policy if they think a transaction was compromised. But without an effective built-in claim verification, the DeFi insurance protocols often have a hard time ensuring whether a claim is valid.

In these situations, the insurance protocols have to either pay out without validating the claim or take the dispute off chain, which could turn into a prolonged and messy battle. If the claimant feels their DeFi insurer has treated them unfairly, they have the power of social media to hurt the insurer’s reputation.

There should be no room for disputes

Nobody – neither claimants or DeFi insurance protocols – want mud-slinging or messy disputes. Unless you have dealt with a situation like this or you have the foresight to avoid them in the first place, you won’t appreciate the importance of the claim verification tools like Astra protocol.

Astra equips DeFi insurance protocols with the world’s only patented claim verification tool to quickly ensure whether an insurance claim is valid. It plugs into any existing platform or protocol with ease, providing legal assurance to the DeFi insurance policies.

Astra’s legal layer and dispute resolution mechanism ensure illicit activity is eliminated from the equation, giving peace of mind to both the users and insurance protocols.

When a user makes a claim on their insurance policy, Astra jumps into action to verify its legitimacy. If it finds the claim to be valid, the insurer must pay out.

If the claim turns out to be invalid, Astra makes recommendations to the insurer as to how they should proceed. Astra prioritizes fairness rather than benefiting a specific group.

Closing thoughts

As the DeFi industry keeps growing and expanding daily, efficiency will be the keyword to success for any legal provider in the industry.

Existing and future DeFi projects would do good to pay attention to dispute resolution. It is a frictionless way of providing peace of mind to all users and onlookers.

Without countermeasures in place to rectify mishaps, DeFi will always remain the riskiest segment of cryptocurrency. That hinders the growth and adoption of decentralized finance solutions globally. With the proper infrastructure for protection and legal matters, it can enter the next stage of development and gain better global traction.

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Blockchain

Astra’s Assurance Layer Makes DeFi Appealing to Institutions

The world of decentralized finance attracts a lot of attention from hopefuls and risk-takers. Despite its promising future, the ecosystem cannot resolve disputes transparently. Your funds are probably gone forever if you accidentally sent them to the wrong wallet address. Therefore, dispute resolution and legal protection will prove essential to making DeFi appealing to institutional players.

DeFi is too risky in its current form

To most people, decentralized finance is an industry segment that lets one gain wealth passively. With the right crypto assets, one can lend, borrow, staking, farm yield, earn NFTs, and a list of other opportunities. It all sounds great on paper, but the reality can be very different.

Regardless of how one wants to spin the narrative, decentralized finance is a risky industry.

Not only are users dealing with volatile assets, but the protocols and services are a risk factor as well. For example, a poorly coded smart contract could result in a hack and funds being stolen. More often than not, users will not see their money returned to them when such an incident happens.

In an industry where everything is decentralized, there is still plenty of manual intervention. Developers need to keep adding features and services, either through community voting or their own decisions.

But there is always a “human factor” in the equation that will create inherent risk. If something were to go awry, there is often no recourse at all, not even through developers intervening.

With those flaws and issues in place, a new solution needs to be found. On-chain dispute resolution is one option worth looking into. It is a compelling concept that benefits not only regular users but also institutional clients. More specifically, with resolution and legal protection in place, broader blockchain adoption becomes a possibility.

Finding the right assurance provider

The concept of on-chain dispute resolution and legal protection is not entirely new. Similar debates have flared up since DeFi began gaining traction.

Insurance providers and anti-rug pull solutions are the first steps in the right direction. However, they are a far cry from assurance and a legal layer. Cutting out fraud and doubt from this industry will pose many challenges, yet nothing is impossible.

Astra protocol boldly forges ahead where others are at a standstill. The project provides a legal layer that plugs into any existing platform on public blockchains.

Its benefits range from ensuring funds arrive safely at the correct wallet address to resolving issues and restoring funds in case of a mishap. All of this is made possible by adding a dispute clause. When both parties agree to use Astra, the dispute clause is added to the smart contract.

Astra uses a combination of human expertise and technology to resolve all issues. That includes human error, fraudulent transactions and accidental payments, should they occur.

The end result is complete legal protection for all parties and transactions. It is a cost-effective and efficient way to resolve any issues that may arise, and add an extra layer of peace of mind to any interaction.

Astra protocol’s patented legal layer can make decentralized finance a much safer and appealing industry. Moreover, the project has partners in KPMG, IBM, and Latham & Watkins LLP.

Closing Thoughts

Bringing a layer of assurance to decentralized finance is a daunting task. With so many projects, protocols, services, and yield farms, tremendous amounts of money flow freely.

Unfortunately, there are also numerous exit scams, rug pulls, and coding issues to contend with. Anyone can see that DeFi needs insurance and other forms of legal protection to remain relevant.

More importantly, introducing this extra layer of security will help attract institutions to the blockchain space. With a growing advisory board that recently welcomed former European Commissioner for Trade Phil Hogan, Astra protocol is on the right track to trigger a paradigm shift. Efforts like these will push the industry forward and help unlock additional liquidity flows.

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Blockchain

Regulatory Compliance

News released on the 19th of July stated the New Jersey Attorney General is cracking down on one of the most prominent market participants in BlockFi by issuing a cease and desist letter. The question beckons whether government regulation will begin to hold back the explosive growth of DeFi or a market solution will arise?

“BIA IS NOT A SECURITY, AND WE THEREFORE DISAGREE WITH THE ACTION BY THE NEW JERSEY BUREAU OF SECURITIES”.

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Blockchain

Technology and Business Combine

Creating a successful technology company requires strategic planning, decisive action, and insightful input from expert advisors who know the landscape — without these, the business is already on the backfoot.

Thankfully, Astra has this and more. The Proof of Trust and the Astra Protocol technology has been granted multiple patents due to its quality and uniqueness. Perhaps even more importantly, the freedom to operate has been confirmed by one of the world’s most renowned IP lawyers, the Rt Hon Sir Robin Jacob.

Our technology delivery partners at IBM were the first to recognise the potential of our design. Together, we have developed multiple working products that already demonstrate the power of a decentralised assurance layer. As interest in our technology grows, more and more influential specialists have helped in our mission to provide the platform that will bring trust and assurance to public blockchains, particularly the world of DeFi. And there are few individuals better placed than technology and business expert Johan van den Arend Schmidt, who recently joined the Astra Executive Advisor panel as Chief Technical Architect.

Johan van den Arend Schmidt.

Johan joins the Astra team from IBM, where he created and led the European Blockchain Innovation Unit. He has extensive international technology and digital transformation experience, including as CEO of CapGemini Consulting, as Partner at PwC, and his 11 years at The Boston Consulting Group. He was also an executive committee member of a FTSE 100 company. All this experience makes Johan the perfect candidate to help guide Astra to secure institutional adoption of blockchain and DeFi.

On starting his new role, Johan stated,

“The Proof of Trust is a company that I believe will truly change the world. It brings reality and trust to digital transactions. No company previously had the vision to think through where you go in a digital world when things go wrong, but The Proof of Trust did.”

“The Proof of Trust provides a solution that is the quantum leap we need to bring mature services into the digital age.”

Astra’s growing Executive Advisory team is vital for the company to achieve its goal of becoming the decentralised legal layer for all public blockchains. The technical, legal and financial expertise available puts Astra in a fantastic position, allowing us to take giant leaps forward in innovation, and boost the entire DeFi market.

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Blockchain

Decentralised Insurance — A Case Study

With Decentralised Finance edging towards mainstream adoption, the need to protect people’s digital assets is becoming increasingly important. Before large institutions can embrace blockchain and DeFi technology, they need to ensure all their transactions and investments are secure.

ASTRA PROTOCOL, FROM THE PROOF OF TRUST, PROVIDES AN ANSWER TO THE PROBLEM.

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Blockchain

This Assurance Layer Is Giving Institutions the Confidence to Enter DeFi Without Worrying About Frauds or Accidental Transactions

nstitutional participation is key to unlocking the future growth of DeFi. But without a proven dispute resolution mechanism, DeFi is too risky for institutions. Astra eliminates that risk.

“What got you here won’t get you there.” When author Marshall Goldsmith wrote it, he was referring to how successful people can achieve even more success and what sometimes holds them back. But his statement is equally applicable to the growth of Decentralized Finance (DeFi) ecosystem.

DeFi has witnessed explosive growth with the total value locked (TVL) in DeFi protocols rising to $53.7 billion from just $2.5 billion a year ago. Simultaneously, a large number of DeFi apps have emerged to facilitate lending, borrowing, and other services without the high costs, slow pace, and intermediaries of TradFi.

The initial growth of DeFi was fueled by retail investors and traders. Institutions such as banks and large corporations have barely scratched the surface of DeFi. But institutions would play a key role in the DeFi ecosystem’s growth towards the trillion-dollar TVL. What got DeFi here won’t get it there.

Tackling the risks institutions worry about

Where there are transactions, there will be disagreements, mistakes, and disputes.

Sometimes these disputes are resolved between the parties themselves without fuss. But often there are complicated situations that cannot be resolved without an efficient dispute resolution mechanism.

Institutions are a bit hesitant to access and take advantage of the DeFi products and services. For legit reasons, of course.

The stakes are high for them. Imagine a large corporation sending funds to the wrong wallet address or discovering that a particular transaction was a scam. Given that there are very few regulations in place to protect users in such cases, DeFi in its current state is too high-risk for corporations.

Enter Astra, an assurance protocol that adds a legal layer to existing public blockchains such as Ethereum, Polkadot, Cardano, and others. It ensures that the funds reach safely at their correct wallet address.

For a transaction to go through, both parties must use Astra as their platform of choice. The assurance protocol adds a clause in smart contracts to become the default mechanism to resolve all potential disputes including accidental and fraudulent transactions.

If either party is dissatisfied, they can file a dispute and invoke Astra to resolve it quickly and cost-effectively. Both parties can add evidence and share their side of the story. Once the dispute is resolved, the smart contract either automatically proceeds or terminates. The funds land safely in the hands of the correct party.

The assurance protocol is giving institutions trust, confidence, and peace of mind while operating in DeFi.

Astra recently announced that it has appointed former EU Trade Commissioner Phil Hogan as an Executive Advisor. Hogan brings decades of experience in politics, international affairs, and business. He could prove useful in helping Astra roll out its legal assurance layer to governments, corporations, and other institutions around the world.

Conclusion

Businesses have already started embracing decentralized finance and engaging with the whole new financial ecosystem. But given the risks, they would turn to solutions like Astra to feel safe and transact confidently in the DeFi ecosystem. In fact, large corporations including Fortune 500 companies, and government institutions are already using Astra’s full legal layer for peace of mind.

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Blockchain

What do we need for institutions to adopt DeFi?

The remarkable rise of Decentralised Finance has primarily been because it gives more people access to the financial market. Traditional financial instruments have been mainly the domain of banks, brokers and other large financial institutions, which are out of reach for most people.

The difference with DeFi is that provided an internet connection is available, more or less anyone can engage. The increase in popularity has led to an 18-fold rise in market size since 2020. This impressive growth means large institutions can no longer afford to ignore DeFi and will need to think about ways to adopt the technology or be in danger of losing a significant chunk of their market.

There is already evidence that some major institutions are already using DeFi. Pat LaVecchia, Co-Chairman and Chief Executive of Oasis Pro Market, a regulated marketplace and alternative trading system for digital securities, said in a webinar in February:

“INSTITUTIONS ARE USING DEFI EXTENSIVELY BECAUSE THE RETURNS ARE PHENOMENAL. SOME HEDGE FUNDS INVESTING IN DEFI HAVE ALREADY ACHIEVED 100% RETURNS.”

The difficulty is that DeFi is still high-risk. We have discussed the specifics of associated risks in previous posts, and how although the technology is hugely promising, it is still vulnerable. One of the most well-known cases saw crypto enthusiast and billionaire Mark Cuban lose out as the value of Titan Coin flashed to just above zero in several hours. The fact is, without a security layer, DeFi and crypto are just too dangerous for large institutions like JP Morgan and Goldman Sachs. Why would they invest if there was a chance that they could lose billions in a ‘rug pull’ or another similar scam?

Along with improved regulation surrounding DeFi and crypto assets, Astra Protocol from The Proof of Trust will provide that decentralised legal assurance layer that reduces the associated risk with many new decentralised financial protocols. For example, any smart contract governing DeFi lending and borrowing could be embedded with Astra to ensure that both parties are safe whilst maintaining privacy, anonymity and all the other benefits of a decentralised system. One particular problem in DeFi lending and borrowing is price oracle manipulation, where an attacker artificially alters the exchange rates of tokens. Such attacks have resulted in a loss of around $100 million. If it is suspected that someone is attempting to manipulate rates, a panel of carefully selected expert human adjudicators will review the problem and all available evidence independently. Their decision would feedback into the smart contract, which would determine how the transaction proceeds. Either the price oracle was fine, and all is well, or the exchange rates were found to be wrong, and the information is updated, and then the transaction can proceed legitimately.

Here we see the value of Astra. We provide a safety net for all transactions so that large well-renowned institutions can participate and further increase the size and reputation of DeFi. Astra creates an environment in which people and businesses are safe to engage in without compromising the benefits of a decentralised system.

Astra creates an environment in which people and businesses are safe to engage.

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Blockchain

Justice in Equality

Many of us grow up hearing that “life is not fair”, but does that mean we should just accept that statement without trying to make a change?

Combined technology and human expertise.

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Blockchain

DeFi Attack

Some of the strongest Decentralised Finance use cases to date are borrowing and lending protocols. The transition to a fully-mature economy that includes lending will place blockchain-based finance center-stage, bringing many new investors — and borrowers — to the DeFi space.

With the much lower interest rates compared with traditional borrowing services, alongside other qualities such as speed and transparency, it is no wonder why the DeFi market is expected by many to be the future of finance.

However, these new products and services are not without risk.

DeFi protocol xToken announced it suffered an exploit, through which $24.5 million in SNX and BNT tokens were drained by an attacker using flash loans. Flash loans are a new type of near-instant, un-collateralised lending made possible with blockchain technology. While these loans have gained popularity, they also have made multiple recent headlines for the wrong reasons, as they are being used to exploit several vulnerable DeFi protocols.

Flash loan attacks are where a cyber-thief takes out a flash loan from a lending protocol and uses it alongside various types of gimmickry to manipulate the market in their favour. They can be used to get access to large amounts of funds at a cheap rate because the crypto is repaid instantly.

In this case, the malicious actor found a weakness in the smart contract, which gave them the ability to sell wrongly minted tokens. Many of the smart contracts that govern the loans in DeFi rely on price oracles to input the value of the assets at any given time. There is no guarantee that these are accurate, which means users could lose millions.

Users could lose millions to malicious actors.

Currently, due to the fact that the smart contracts are immutable in nature, if the oracles push inaccurate data to the contract, the contract will result in a incorrect execution and end up favouring some malicious actor, and there is nothing to undo this procedure in the market.

These type of attacks don’t just result in stolen funds, they can severely damage a projects reputation and resources, as shown by xToken’s TVL dropping by roughly 30% to $63M.

Michael J Cohen, xToken’s founder observed, “DEFI CAN BE BRUTAL AND WE IMAGINE IT’LL TAKE US SOME TIME TO REGAIN THE TRUST OF OUR STAKEHOLDERS. HOWEVER, WE FULLY INTEND TO PUT IN THE WORK AND WE HOPE WE CAN REGAIN YOUR TRUST OVER TIME”.

ASTRA would prevent malicious actors from using flash loans to instantaneously borrow, swap, deposit and again borrow large numbers of tokens. ASTRA ensures that any disagreements can be resolved and that the borrower and lender are never out of pocket.

If a transaction results in one party being unhappy with the outcome, it will be reviewed by multiple independent experts, with the majority decision determining the outcome. The decision and funds are then passed back to the relevant parties.

The ability to exploit smart contract weaknesses as well as other malicious methods of obtaining funds would be removed from the DeFi market with ASTRA.

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Blockchain

Access to Justice for everyone

ASTRA will undoubtedly be vital for building trust in DeFi projects, ensuring that the incredible journey can continue, but that is just one of many excellent use cases. As well as providing the all-important decentralised legal layer, our technology brings affordable access to justice to all sections of society, not just the rich and powerful.

Several projects are now appearing that focus on making banking available to those without access or that insure the uninsured. We believe access to justice for all is equally as important. Most people haven’t got vast amounts of resources to spend on court battles or have months and years to wait until they see justice. With ASTRA, we want to bring access to justice to everybody — without the need to spend thousands on litigation or wait years for the outcome.

Justice is expensive, at least it has been to date. Even small-scale litigation in the UK costs between £2,500 and £10,000 in administration expenses alone, even before you add in legal fees, and usually takes between one and two years to resolve.

“ASTRA BRINGS ACCESS TO JUSTICE TO THOSE WHO WOULD OTHERWISE HAVE TO SUFFER THEIR LOSSES AND LIVE WITH UNFAIR SITUATIONS.”

The cost in both time and money may be harmful to individuals and companies wishing to settle disputes so they can carry on with their day-to-day lives.

At ASTRA, we see this as a significant barrier, and we recognise that something needs to change.

Take for example, if someone wanted to buy a smartphone from a seller in a different country via blockchain. What happens if the phone arrives and is not as advertised or simply not fit for purpose? Until now, there has been no affordable, effective way to resolving the issue on-chain. However, if both parties had agreed to use ASTRA as the dispute resolution protocol, the situation would be different. In that case, the issue could be resolved quickly with appropriate subject matter experts deciding the outcome remotely, at a much lower cost than other legal processes.

No need for courtrooms.

ASTRA maintains a diverse pool of human experts covering an extensive range of expertise — meaning we can resolve a vast spectrum of issues, from small-scale to more complex international business disputes.

With no need for courtrooms and a large pool of many different subject matter experts, ASTRA brings access to justice to those who would otherwise have to suffer their losses and live with unfair situations.

THE ASTRA PROTOCOL PARTNERS

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