InsurAce.io is the name of an up-and-coming DeFi Insurance Protocol, trailblazing by launching on both Ethereum and Binance Smart Chain. This was all achieved in a very short space of time and the project has gone even further by offering insurance services on a variety of other blockchain platforms, including Terra, Solana, Heco, Fantom & Polygon. So far, they have protected more than $33M DeFi assets for over 40 DeFi protocols and they aim to change the fact that less than 2% of the $60 billion dollars of DeFi holdings are currently insured.
The project’s protocol allows them to provide insurance services to the protocols and users of DeFi so that they can protect their funds from smart contract vulnerabilities, bugs and attacks. The premiums for their insurance plans are incredibly small due to the fact that they provide portfolio-based insurance allowing users to insure their range of DeFi assets together, saving them on premiums and gas fees. InsurAce.io offers substantial underwriting mining rewards, and INSUR token holders act as governance for claims made via the dApp. Excess capital held on the protocol will soon be utilised in DeFi investments to maximise returns for miners, and reduce premiums for customers.
To get a better idea of why a project like this is needed, we have taken the opportunity to sit down with Oliver Xie, the founder of InsurAce.io. He’ll be answering some of our burning questions about his new project.
1) What made you think that the insurance industry needed to come into the blockchain space?
It is no secret that blockchain and cryptocurrency are revolutionary technologies that have gained worldwide fame, especially the decentralized finance (DeFi) which sprung up last summer that aims to completely shake up the financial services through the adoption of blockchain technologies and digital asset ecosystems. Among the various sectors that the traditional financial industry has, such as lending, exchanges, asset management, and etc, insurance is an indispensable part of this whole landscape by its nature. The smart contracts that blockchain technology brings is a perfect fit for building insurance products and services.
More specific to the DeFi space that we’re building, there are many challenges to overcome such as extreme price volatility, unregulated market behaviours, and biggest of all, the attacks by malicious hackers, which are restricting the industry from its future potential since its inception. According to statistics, the security hacks have caused over US$1.1B of asset loss to the Ethereum ecosystem alone, and US$19.3B as to the whole crypto currency world.
There are emerging solutions to each of these issues such as security auditing, bug bounty programs, but DeFi security insurance is the only economic countermeasure that can well manage such risk. The total value locked (TVL) locked in DeFi has hit US$89.2B at its peak, whereas less than 2% is protected by insurance, and we believe there is still huge space for DeFi insurance to develop and thrive.
2) What protocols do you currently cover and what are the most common claims that you’re seeing?
We have a really fantastic list of protocols that are listed and covered by our insurance services, like Anchor Protocol, Mirror Protocol, mStable, Autofarm and other 40+ protocols. As of writing, InsurAce.io has covered over US$33M of DeFi assets over 7 public chains. All these information are available via InsurAce.io’s dAPP (app.insurace.io).
We currently offer users of these protocols insurance against smart contract hacks and bugs in the event of an attack, they can claim for loss of funds through our app simply by submitting proof of their losses, which is then decided on by our community voting, based on an investigation report from our advisory board.
We have been fortunate to have only one claim thus far. The claim was rejected as the covered protocol had not suffered a hack and there was no actual loss of assets, but the claim was processed strictly following our claim process. The details of this claim can be found via this blog post:
3) What are the biggest benefits of your platform to a user?
We have a few competitive advantages of our platform that can create greater benefits for users compared to some other insurance protocols in the market.
- Easier Access
There is no KYC required to use our services, users simply need to connect their wallet to our dApp and all products are available then.
Our dApp has been deployed on Ethereum and Binance Smart Chain (BSC), with upcoming expansions to more chains, which will provide much easier access from a variety of different chains.
- Broader Coverage
Currently we have built a full-spectrum cross-chain insurance product line, covering 50+ protocols running on Ethereum, Solana, BSC, Heco, Polygon, Fantom and Terra. Meanwhile, the centralized exchange risk and IDO event risk are also covered, and more insurance products will be offered soon, such as cover for NFT, cross-chain bridge, and stable-coin depeg.
- Lower Cost
Unlike some staking-based pricing models, our risk assessment based model will be able to more accurately price the risk for individual protocols, which leads to more reasonable pricings.
Furthermore, we also offer the unique portfolio-based coverage with unique pricing strategies, which can help to save up to 60% on premiums and 50% on gas fees. Such an approach also allows users to insure all of their DeFi assets in one place instead of through multiple protocols and multiple transactions.
- Protected Returns
The simple benefit of insurance services for DeFi is that it allows big institutions to participate in DeFi safely, which opens up the space to more revenues and greater returns for all involved. Take our recent partnership with Anchor Protocol as an example. Anchor Protocol offers a fixed return on a crypto stablecoin of around 18% per annum. We offer insurance services for Anchor Protocol for around 2.5% which means that you will now be receiving a fixed-rate return on a stablecoin asset that is protected against hacks and bugs of around 15% per annum. That is a great return in any normal market, but given the current condition of the wider economy, it is a fantastic return.
4) Do you have upcoming plans to expand the project?
Yes, we’ll continue to improve our products, build community engagement, and expand on the marketing and sales. There are some key developments such as:
- i) Insurance-as-a-Service API, aiming to offer insurance services in a faster, more efficient 0-click manner, in that users of our partners will be automatically insured as they interact with DeFi protocols. This will greatly expand our marketing and sales network.
- ii) Expand to more public ecosystems such as Solana, Polygon, and Arbitrum, which will allow users to access insurance service from any corner of the blockchain world;
iii) Investment vehicle v1.0, which will provide higher returns to our users and create a sustainable ecosystem for all participants.
- iv) More partnerships to be established, more protocols to be listed and more community engagement. We now have set up partnerships with quite a few top projects with community support globally.
We believe all these efforts will help us to move forward to a leading multi-chain DeFi insurance protocol.
5) Talk to us about the tokenomics of the INSUR token and how users can benefit from holding, using, and trading them?
$INSUR, is our governance token used to incentivize the ecosystem participants retroactively. The current use scenarios for INSUR tokens are as follows:
- Representation of voting rights in community governance scenarios such as claim assessment, proposal voting, etc.
- Mining incentives for capital provisions to the insurance pool and investment products
- Eligible for fees generated by InsurAce.io through governance participation
- Other community and ecosystem incentives
Along with the development, we will include more use scenarios for $INSUR token via community governance.
The token has been listed on centralized exchanges such as Huobi Global and Bitcoin.com, and decentralized exchanges such as Uniswap (Ethereum) and PancakeSwap (BSC). We’ve built and offered an in-app cross-chain bridge between Ethereum and BSC, allowing traders to do cross-chain arbitrages easily.
6) Do you think people are going to rapidly start insuring their cryptocurrency and DeFi portfolios in the near future?
Yes, we have seen that more and more DeFi users are starting to know and use insurance as a hedge tool against smart contract risk, especially when the security hacks are prevailing recently. The trend is clear that people will pay greater attention and cost to risk management at a time when DeFi gets more mature.
However, the insurance protocols need to improve their product offering and user experience as well. They need to be more affordable, universally accessible and user friendly, with more products offered inline with the DeFi evolvement.
7) Are your services restricted to only holders of the INSUR token?
No, anyone with a wallet can connect to the protocol and use the services, such as risk underwriting and earn, buy covers, cross-bridge transfer, etc. Holding of INSUR tokens doesn’t constitute a prerequisite of being the user, however, the benefits of the platform will mostly be distributed to the token holders. In this sense, to be a token holder will be able to enjoy the benefits in the long run.
8) What do you do differently that means your project will be the one to drive insurance forward in the crypto space?
We respect all the other players in this space, and are working together to build this vertical and make DeFi a safer place. Nevertheless, we do have some unique competitive edges here.
We have a highly professional core team consisting of actuary scientists, blockchain technology experts, security veteran, and legal advisors to build this project with high standard and professional capabilities. More importantly, the whole is very passionate about DeFi and dedicated to build InsurAce.io into a leading DeFi project.
We have our unique product designs such as the portfolio-based coverage, aggregated underwriting pool, multi-chain insurance, and etc., which makes us the first of its kind to offer and create value to our users and token holders.
Credibility is the foundation to the success of insurance business, which we always put as our top priority. We design, build and operate this platform with maximum transparency and security. We have dedicated security experts and invest a lot into security. Our long-term goal is to be fully decentralized and create a risk hedging harbor where everyone can rest their DeFi journey safely.
(iv) Investor and community support
Apart from the team, we are also backed by a strong investor lineup, including DeFiance Capital, ParaFi Capital, Alameda Research, Hashkey Group, Huobi Ventures, Hashed and other top funds. These investors provide us with solid endorsement and development advice. More importantly, we have a united community that keeps supporting the project, providing feedback and expanding the project network. All these provide us with a strong driving force to stand out among other competitors.