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.
As more and more money is invested in DeFi protocols, the risk of scams, hacks, and fake opportunities becomes more of a concern. Along with a decentralised legal protection layer from Astra, decentralised insurance is an excellent way to enhance peace of mind. Just as traditional insurance premiums protect your belongings, DeFi insurance can protect your crypto assets.
However, conventional insurance premiums can produce false or disputed claims, often leading to an unsatisfactory settlement or, occasionally, a legal battle.
Decentralised insurance is a very recent idea that relies on blockchain technology, which is also very new and innovative. Because DeFi insurance hasn’t had the luxury of time, it does not yet have sophisticated mechanisms to prevent fraudulent claims.
ASTRA PROTOCOL, FROM THE PROOF OF TRUST, PROVIDES AN ANSWER TO THE PROBLEM.
Earlier this year, we saw an example of what can happen when there is a disagreement over an insurance policy and no practical way to resolve the problem. A Twitter user by the name of kferretcrypto bought a policy from insurance protocol Nexus Mutual in September 2020. In February this year, the user tweeted that the Yearn hack triggered a 1,000 Ether payout (or about $1.7M) by ArmorFi, an insurance aggregator protocol, in which he staked his claim. However, ArmorFi disagreed.
Here, both parties assert that they are right and the other in the wrong, and both have attempted to come to some amicable settlement, but this is an unsatisfactory solution. So far, it appears that the problem persists. Going forward, DeFi insurance absolutely must have a way of solving these issues fairly and conclusively.
Astra Protocol, from The Proof of Trust, provides an answer to the problem. As a decentralised legal layer, we can deliver an independent review of all claims that doesn’t compromise any of the incredible attributes of DeFi, such as privacy, speed and cost. With a unique blend of technology and human expertise, Astra ensures the fairest outcome for each case.
A demonstration of how Astra enhances DeFi insurance is given below.