DeFi insurance may rely on CDS (Credit Default Swap) to achieve overtaking in curves, but there are also risks such as single point of failure.
Original title: “DeFi Notes for Girlfriends: I rely on moments for insurance”
Written by: Kay
This is the second article in the “DeFi Notes for Girlfriends” series. This series is dedicated to providing some common sense about DeFi in the most accessible language, including not limited to conventional concepts such as impermanent loss/AMM, or Regarding the analysis of the principle and design of the new project, we strive to make it (imaginary, possible) completely understandable to girlfriends who do not know DeFi at all. I hope I can write at least 30 articles.
This is actually not in the writing plan at the beginning. It is helping teacher JX to write another English content, which is part of it, but it is not so comfortable to write serious English content directly, so start with this non-serious content in Chinese.
Aspects of Classical DeFi Insurance (Before Cronje)
The time has come to 2020Q4. Recently, the daily gas consumption has been maintained at around 30Gwei. At present, most DeFi players regard Q4 as a garbage time for the farm break. It is always difficult to reverse the trend. If you want to give DeFi in 2020 If Hype chooses a person of the year, there is a high probability that no one will dare to name Andre Cronje (YFI developer, often abbreviated as AC in Chinese circles).
When the price of YFI was in the midst of this round, some people even redefined BC (Before Christ) / AC (After Christ) on CT (Crypto Twitter):
- Before Cronje (Before YFI appeared)
- After Cronje (after YFI appeared)
The subsequent chad and YOLO frenzy triggered by YFI will not be repeated here, see the picture:
The point here is, whether you like him or not, or whether it has been developed by AC’s follow-up platform/development of SAFE, EMN, LBI and other projects 🈹, it must be admitted that AC is indeed a good at both economic model design and development There are not many geniuses of this kind. At the same time, YFI may really open an era of fair launch projects.
In the field of DeFi insurance, AC also put forward some constructive ideas, so here we also use him as the boundary, let’s talk about the classic insurance in the Before Cronje era.
classification
When it comes to DeFi insurance, the first reaction of most people is of course Nexus Mutual (NXM). “Mutual” is generally translated as “mutual insurance” in Chinese. This concept, the most familiar case for Chinese people may be Alipay’s mutual treasure. First of all, I have to say that “mutual insurance” is a very basic form of insurance, which is different from the real modern insurance. Take Bao as an example. Take a comparison from the Internet:
Differences in insurance contracts
For modern insurance, when purchasing an insurance product, an insurance contract will be signed with the insurance company; the contract clearly stipulates the guarantee responsibilities, claims standard, liability exemption, etc.
Joining “Huahebao” does not sign any contract. You can only learn about the content of the guarantee and the claims standard through the platform announcement.
Difference in premium payment
When purchasing a certain insurance product, modern insurance companies will clearly inform the insurance rate, and there will be no changes in the premium in the next few decades.
The premium of each term of Hu Hubao is different, and the cap of each term is 188 yuan, that is, the premium of each term is unknown before the cap is reached.
When claims are disputed, the processing methods are different
Insurance: You can apply for arbitration or prosecution, and use the weapon of law to protect our legitimate interests.
Xiang Hu Bao: Start the jury (like DAO). On March 26, 2019, the first compensation trial was launched, and 900,000 compensation judges quarreled forever. These 900,000 jurors are not majoring in medicine or medicine. However, it is up to these unprofessionals to judge whether they can get compensation.
In addition to mutual insurance such as NXM, the current DeFi insurance business in a broad sense also includes:
- Financial derivatives (such as options), such as Opyn
- Prediction markets, such as Augur
- CDS, social network guarantees, such as CDx, VouchForMe
- Other models, such as Etherisc, a universal decentralized insurance application platform
Image source: Cointelegraph China
Yes, the three major factors affecting the value of an option are the underlying price, volatility and time. There are also three factors that affect the value of insurance, the price of the insured asset, the time of insurance and the risk of the insured asset (that is, the volatility of the insured asset). Volatility is risk. Its academic definition is the standard deviation of the rate of return, which is used to measure the risk of assets.
Therefore, it can be considered that the essence of options is also a kind of insurance in a broad sense. The prediction market, CDS, etc. models are similar.
In general, the current DeFi insurance is basically based on crypto-native businesses, and has not yet involved large-scale off-chain businesses, and the number and types are relatively limited. Of course, it can be considered that there is still a lot of room for development. Here are a few typical projects.
Nexus Mutual
In this year’s DeFi Hype, the leading projects of mutual insurance are almost only Nexus Mutual for a long time. Nexus Mutual is a community-based insurance platform. Token holders are both income earners and risk takers. At the same time, they also use the tokens they hold to determine how much insurance a certain project can have and whether to approve claims.
Of course, this is also a controversial point. An inaccurate analogy is to let the shareholders of an insurance company decide whether to pay.
The current payment resolution model of NXM is:
- The first round: voting among the claim assessors, if more than 70% of the people reach a consensus, the result will be directly issued, if less than 70%, the second round will be carried out. (If the minimum number of votes is not reached, all members participate in the vote)
- The second round: All Nexus Mutual members participate in the voting, and the consensus of the majority is passed directly. (If the minimum number of votes does not reach the result of the first round of majority selection)
In fact, so far, the only claims passed by Nexus Mutual are three flashloan attacks that bZx suffered in February this year. The other 20 claims have been rejected by community governance. This also includes, for example, when 312 plummeted this year, due to network congestion and clearing mechanism problems, some ETH was liquidated by $0, causing users to lose more than $5 million. These losses were not covered by insurance (although MakerDAO Subsequent to compensate the user through auctioning MKR). In other words, at present NXM only accepts compensation for the security layer of the contract. For the loss caused by the mechanism problem, it seems that the purpose of transferring risk cannot be achieved through NXM.
You can find all the projects that support insuring on the Staking page (currently supporting 39 DeFi products). Most NXM focuses on the insurance policies of the head projects such as Compound, Curve, and Aave. Of course, this is because users are more secure about these projects. For recognition, on the other hand, it is also because these items have a large amount of purchase, and some of the tail items can be insured very little, even only a few Staker and a few hundred NXM.
Nevertheless, according to DeBank data, since 312, Nexus Mutual’s total lock-up (TVL) has reached US$82.54 million, an increase of more than 3000%. This is of course related to this round of DeFi Hype, but it can also be speculated from the side. ——”If the “shareholders” decide whether to compensate or not, then the “rogue” users who are underwriting will be relieved.”
In addition, the YFI product yinsure.finance mentioned later is also the insurance underwriter currently connected to NXM, so NXM may be one of the few items that has not been siphoned by YFI in the summer, but has enjoyed the bonus.
In addition, I have to mention the model of the NXM token itself, which uses the IBCO (Initial Bonding Curve Offering). The characteristic of this model is that because the price is determined by a fixed function, how many tokens are generated is The price will almost certainly skyrocket at the initial stage, but after the initial stage, it is relatively difficult to skyrocket and plummet. On the other hand, because the token used for mint is ETH, it has a strong price correlation with ETH. From the price point of view, it is currently more like a leveraged ETH.
Later, tokens that adopted the IBCO model obviously noticed the latter point. For example, the NFT concept currency GHST of the AAVE ecosystem directly uses DAI to mint to reduce the price correlation with ETH.
In addition, the use of the entire NXM platform and the mint of the token itself requires KYC, but some people have made WNXM (the ERC-20 token that anchors NXM). Currently, Huobi and Binance are all WNXM, because mint and burn NXM’s behavior will also bring about price fluctuations, and there is often an arbitrage space here.
Opyn & Hegic & Opium
Opyn
Opyn is a 19-year project. At the beginning, I wanted to build a margin trading platform similar to the current dYdX. It once provided the highest leverage available for ETH in the DeFi world (6 times, dYdX was only about 5 times for a long time). Later, the focus of the project was pivot to Compound Insurance, and then pivot to on-chain options. Currently, American options of ETH, UNI, WBTC, SNX, YFI are provided (different from European options, American options can be exercised at any time), but the liquidity is average, which also leads to relatively relatively (Another reason is that option products are mainly created by the team). For example, YFI has only one put option with an exercise price of 20,000 USDC.
Once the option is created, the user will mint the corresponding oToken vouchers (ERC-20 tokens). These oTokens can be traded on Uniswap, and the option seller can sell these oTokens on Uniswap.
In addition, Opyn also provides insurance services similar to NXM, but currently there is only one product called Compound principal insurance.
What I have to mention here is that in August Opyn’s ETH smart contract suffered a hack, causing a loss of 370,000 US dollars. It is said that the relevant contract was not audited at the time of the incident. After the incident, the Opyn and white hat team conducted it again. A similar white hat attack took out the remaining pledge funds in the Vault and promised compensation for related losses.
Opyn is also developing the V2 version, and may add new features such as margin, multi-currency mortgage, and trading system upgrades.
Hegic
Hegic is generally similar to Opyn and is also an on-chain option protocol. Currently, it supports ETH and WBTC. The difference is that the liquidity provider in the Hegic option model is the collective seller of options, but they will not directly create option products for each option. Customized by the buyer, all option products are independently selected by the buyer in terms of type, exercise price, and period, which is very flexible.
The option price is determined in advance by the Hegic algorithm. The option seller can automatically obtain the relevant option price by entering the option terms that he intends to purchase. At the same time, Hegic will manually update the most important component of the option pricing in the Black-Scholes formula based on historical data—— Implied volatility. Hegic’s option prices are derived from data published by skew.com, and then the implied volatility (IV) is manually updated in the Hegic agreement, rather than being priced by the market in real-time dynamics. Therefore, there may be arbitrage opportunities between Hegic and other options platforms.
My definition of Hegic is “chain option vending machine”, or the Uniswap (AMM) form of options, but according to Uniswap’s experience, it seems that this model is more suitable for long-tail assets, and options tools are generally required It is an asset that has become a “public lover”. I have to say that the overall idea and realization are good. It has the simplicity that science men like, and, like AMM, it is something that has never been seen in traditional finance. But whether the basis of existence will be falsified is another matter.
Like Opyn, despite being audited, Hegic had two important vulnerabilities in history.
Opium
Opium means opium. The project is as its name. Although it uses the traditional order book model, it is a real fucking car. The supported option types include very radical binary options, except for the traditional “popular lover” currency. In addition to the options, there are also some innovative products, such as:
- The option of Ethereum fee gas helps the farmer hedge against gas fluctuation risk
- The COMP option OEX-ZEPO-1*COMP before the launch of COMP has an exercise price of 0, realizing a product similar to the traditional CEX “futures stand-alone currency”, but the traditional CEX futures currency nominally anchors the real currency for future delivery Yes, and through options, it has nothing to do with the actual currency delivered, and it can also enable users to trade before COMP goes online
In addition, compared with the 100% margin requirement of Opyn and Hegic, Opium currently has only 33% margin requirement for seller users who use DAI, and it also supports multi-asset margin.
Etherisc
Etherisc can be traced back to 16 and 17 years, and is similar to most of the same period, with a big vision and awkward landing. Many people say that he is Aragon in the insurance industry on the chain and wants to build a universal decentralized insurance application platform so that developers can use this platform to quickly develop new insurance products.
The Etherisc core team has developed some general insurance infrastructure, product templates, and insurance license-as-a-service (insurance license-as-a-service), allowing anyone to create their own insurance products.
At present, the Etherisc community has designed a set of basic insurance products, ranging from flight delay insurance and hurricane insurance to encrypted wallet and loan mortgage insurance, but most of them seem to be just demo tests.
The New Story of DeFi Insurance (After Cronje)
yinsure.finance
yinsure.finance is not DeFi + NFT, but CDS of NFT shell.
When looking back at articles about the 2008 financial crisis, some words such as CDS and MBS will always pop up. Here is an explanation of CDS:
- CDS is not really a new thing, it is a guarantee
- Zhang San borrowed money from Li Si, and was afraid that Li Si would not pay it back, so he sought guarantee from the “old mother uncle” everyone trusted
- The financial bricksman clicked on the calculator Monte Carlo regression analysis and told the old mother that Li Si had a 2.56% probability of not repaying the loan.
- The old mother’s uncle collected 10% of Zhang San’s guarantee fee and signed a guarantee contract. If Li Si ran away and did not pay back the money, Grandpa would pay for it out of his own pocket and repay Zhang San in full.
So far, it is the conventional guarantee, which has existed a thousand years ago, and it is nothing new.
What if this contract can be bought and sold in the secondary market?
- Li Si won the 5 million lottery ticket, Zhang San is not worried that Li Si will not pay back the money
- Zhang San feels that the guarantee fee for the old mother is a little short, and wants to sell this guarantee contract for 5%
- Zhang San and Li Si’s mutual friend Wang Wu appeared. Wang Wu always felt that Li Si was unreliable and too arrogant. Sooner or later something happened and he accepted the guarantee contract.
- Li Siguo really used his 5 million to speculate in crude oil contracts. Not only did he lose money, he also owed 10 million.
ending
- The money Zhang San borrowed was not recovered, and the sales contract continued to lose 5%
- Li Si became Lao Lai
- The old lady returned the guaranteed loan in full to Wang Wu who held the guarantee contract
What is CDS?
This guarantee contract is the CDS, and the essence is tradable. Because it is possible to trade, even though a person like “Wang Wu” did not actually borrow Li Si, it is still possible to make a profit through CDS, which in this case is 20 times the profit.
The real prototype of the movie “Big Short” has been suffering from the inability to directly short the U.S. housing market, because mortgage bonds have neither contracts nor options, until such products as CDS were discovered:
I don’t comment on the goodness and badness of the CDS model. Personal opinion. If everyone knows the rules of the game, there’s nothing wrong with it. When people are beaten, it depends on people making money. The story is that Li Si paid back normally)
People who think that these derivatives are bad, most of the time, it’s just that human nature is risk-averse, and if you lose, you will throw the table.
Okay, I explained so much. Going back to yinsure.finance, the description of AC at the beginning is like this, it looks like it is just an NXM that does not require KYC:
Insurer Vaults : The insurer deposits funds in the vault to form an insurance fund pool, and usually collects the weekly premium paid by the insured. When the claim is approved, the fund pool is used to pay the insured;
Insured Vaults : The insured deposits funds into the vault and becomes the insured. The insured must pay a 0.1% start-up fee when depositing, and a weekly premium of 0.01%; it can be withdrawn at any time;
Claim governance (Claim Governance) : Insurance arbitration is conducted through community voting to determine whether a claim is required.
But when yinsure.finance really went online, everyone at Da Ya found that things were not simple. Everyone said that Andre made a combination of DeFi insurance and NFT.
If you understand carefully, the concept of NFT here is not important. It’s just that NFT is convenient for distinguishing insurance types, duration, and number of claims, and can be easily traded on platforms like opensea—this is a feature that NXM does not have, and it can be traded. In the insurance policy, yinsure is the CDS in the NFT coat. Of course, it is relatively rudimentary.
According to data from the Opensea platform, the current first month transaction amount of yinsure.finance’s NFT insurance policy on the platform has reached 5266.6 ETH, or approximately US$1.96 million.
At this point, I suddenly had an idea, since Hegic can be the “AMM” of options, will there be an “AMM” of CDS? (The single-digit transaction fee for platforms like opensea is still not low) I believe that similar products will appear soon.
If you cannot imagine the impact of CDS on the encrypted digital currency market now, you may wish to refer to the CDS market size in the traditional financial sector. Although CDS was only born in the 1990s, the market has grown rapidly. According to data from the U.S. Office of the Comptroller of the Currency, from 2000 to 2008, the CDS market in the United States expanded significantly year by year, from US$312.4 billion in the first quarter of 2005 to US$15897 billion in the fourth quarter of 2008, an increase of more than four times, accounting for credit The proportion of the total derivatives market has remained above 85%, and it once became an important source of income for US investment banks.
Another example is that in the modern foreign exchange market, 95% of the trading volume comes from speculation and 5% comes from “real demand.”
yieldfarming.insure
In this DeFi Hype, in fact, for a long time, AC is almost a religious image of the gods. People’s criticism of AC still starts with AC’s retweet to yieldfarming.insure.
Simply put, this is a project developed by AC sponsored $25,000 (later AC raised hundreds of thousands of dollars on this project). The token SAFE may have been heard by readers. Before the market turned bearish, the two core developers collapsed at the beginning of the project because of the “uneven division of labor and stolen goods”. Simply put, it was a “scumbag man cheating college students to work madly and earning millions, and internal strife might return to zero. The story of watching a movie.
Later, one of the college students said that he had dropped out of school for a year and would continue to stick to his crypto ideals, love DeFi, and Andre, and would continue to develop this project, so there was a migration of SAFE2.
In terms of mode, due to the particularity of the encrypted digital currency market, the use of such CDS products is not limited to this. yieldfarming.insure (SAFE) introduces the insurance policy (yNFT) generated by yinsure into its own mining mechanism: pledge the yNFT of yinsure.finance into the official SAFE contract to obtain SAFE token rewards. Supported by the insurance policy of yinsure.finance, the SAFE project was very hot at first, and its price once reached $4,000; however, due to disputes within the community, the currency price plummeted. Although the SAFE project ended in failure, it also showed the profound impact of CDS products on the cryptocurrency market.
“I rely on the moment” of DeFi insurance
This paragraph pays tribute to Mr. Wang Chuan’s “I rely on the moment”, but it’s not like Mr. Wang Chuan’s writing about Tesla’s success. It’s already been written above. Perhaps a corner overtaking can be achieved through the CDS mode. What I want to write here is Possible failure/falsification/alternative of DeFi insurance.
Single point of failure
In the Internet operation and maintenance industry, there is a very important concept “Single Point of Failure”. Large companies generally have multiple activities for storing data in different places, even if an earthquake/flood/mudslide takes away the IDC computer room. (Don’t laugh, earthquakes must be considered as a normal disaster. Floods are good for ordinary IDC computer rooms, but for the BTC mine next to hydropower stations, it is a risk that must be considered). There may be another computer room in a desert in the southern hemisphere. The data is exactly the same, and if something goes wrong, you can switch services immediately.
Similarly, there is a multi-signature scheme for private key management in the crypto world. This article will not be expanded.
There are two types of single point failures, recoverable and unrecoverable, for example:
Suppose you have a laptop that you use daily, and the data in it is not backed up. One day, if the notebook’s memory stick suddenly breaks, the entire notebook will be useless (unavailable). But if you ask after-sales maintenance personnel to help you replace a memory stick, then this notebook can be used again (recoverable).
Let’s change our assumption: it’s not that the memory stick is broken, but the hard disk is completely broken. At this time, the notebook is also in an unusable state. But what’s more serious is that even if you ask the after-sales maintenance personnel to help you replace a new hard drive, you will not be able to retrieve the original data. This is the so-called “unrecoverable”.
In these two examples: the single point of failure caused by the memory module is “recoverable”, and the single point of failure caused by the hard disk is “unrecoverable” (unless you have a backup mechanism).
Obviously, an unrecoverable single point of failure is more dangerous, and the current DeFi insurance model is more likely to encounter the unrecoverable one. But don’t worry about it, let’s look at the failures of the two traditional IT worlds.
OpenSSL Heartbleed & Intel Meltdown
Heartbleed
Heartbleed is a well-known vulnerability in the first half of 2014. When this vulnerability was discovered, it had existed for more than two years. The Heartbleed vulnerability allowed hackers to read the confidential information in the system memory that should have been protected by OpenSSL software (SSL is not accurate. The description is that those websites with links beginning with https:// are tools to protect themselves).
These protected information may include web content that should have been encrypted, personal account passwords, and even information related to credit card transactions. Hackers can also use this vulnerability to monitor communication content on the Internet (such as instant messaging conversations).
This vulnerability affects millions of SSL certificates, including almost all large websites you can think of and have heard of, and until a month and a half after the vulnerability was publicly disclosed, there are still 800,000 most popular TLS-enabled websites 1.5% has not been repaired. The most surprising thing about Heartbleed at the time was not its impact. On the one hand, it was long-lived. On the other hand, it exposed such an important infrastructure-level protocol as OpenSSL. There were only four core developers, and the foundation had a long history. Without sufficient donations, developers have long used love to generate electricity.
That year, Mr. Luo Yonghao, a big V who has now transformed into live broadcast and delivery of goods today, released Smartisan T1, the first mobile phone of Hammer Technology. The 1 million yuan income from that conference was donated to the OpenSSL Foundation, and later Many donations are also mainly from the ticket income of the press conference. According to public information, the total donation of Hammer to the OpenSSL Foundation is more than 4 million yuan.
I am not a fan of Luo Yonghao, but in this matter, respect.
Intel Meltdown
Intel Meltdown, a well-known vulnerability in early 18th, is a hardware-level vulnerability and even more terrifying compared to a software-level vulnerability such as Heartbleed. This flaw allows low-privileged processes to obtain memory protected by high-privileges regardless of whether they obtain privileges or not. The data in space, the exploit is a time-based side-channel attack. It involves most of Intel’s x86/x86-64 microprocessors, some IBM POWER architecture processors, and some ARM architecture processors. In human terms, almost the entire small host and mainframe market, personal computer market, etc. are not spared .
In addition, the high degree of risk of this defect (access to the memory space where sensitive data is located without privileges) once made information security personnel and agencies suspect the authenticity of the defect, and the early announcement of these defects is also very likely to trigger global information A security disaster, so this vulnerability was announced after the security personnel chose to first contact the processor manufacturer and core customers to negotiate a repair plan.
At present, this vulnerability has only been circumvented through software. Although Intel has repeatedly emphasized that security corrections will not significantly affect the performance of the processor, Microsoft’s test shows that in the Windows environment where the vulnerability security correction is installed, the production before 2015 The performance of Intel processors will drop, even as much as 30% in some tests. The fundamental way to fix this vulnerability is to redesign the processor’s microarchitecture. For this reason, Intel, IBM, and ARM have adopted new processor microarchitectures. The launch schedule has been significantly delayed.
A digression, here is what Alan Kay said in the 1970s:
People who’re serious about software should make their own hardware. ——Alan Kay
Those who really care about their own software will make their own hardware.
Alan Kay is also one of the people that Jobs admired. In 1979, he invited Jobs to visit the Xerox Palo Alto Research Center where he was inaugurated. In the 1980s, Apple brought Lisa and its successor, the first generation of Macintosh, to the world. (Graphical user interface) can appear in a real product, and the GUI is the Xerox Alto prototype that was stolen from the Xerox laboratory visit.
In November of the same year that Apple released Lisa, Microsoft officially released Windows 1.0, which is Microsoft’s first operating system with a graphical interactive interface. Since then, the MS-DOS command-line operating system has gradually ended, and the graphical interface dynasty of Windows has begun. The reason why Microsoft switched from the command-line interface to the graphical interface is precisely because of the influence of Apple Lisa.
Another influential quote by Alan Kay is “The best way to foresee the future is to create the future with your own hands.” There is no doubt that the Apple of Jobs in the 2000s is the practical application of this philosophy.
DeFi insurance, how far is falsification?
Look back at the three points just mentioned:
- Single point of failure and irreparable, the most terrible
- The Heartbleed vulnerability exposes the security and lack of incentives of a large number of open source projects. The problem can only be “powered by love”
- Intel Meltdown vulnerability, the lower-level architecture may also have problems
Didn’t understand? Read it again.
Is that all possible?
Yes, it is all possible.
- Contracts on the Ethereum network generally have no way to soft upgrade, usually only through the method of contract replacement, and this operation generally needs to be completed manually by the user, that is, it cannot be automatically repaired
- Almost all DeFi insurance projects are open source projects. Insufficient incentive mechanism is a common problem (of course there are also well-designed ones)
- The good news is that a large number of DeFi project developers were already free in the last round. Participating in project development focuses more on self-realization rather than making money, but anyway, whether there is incentive or not, is still very different
- Is it possible that the underlying architecture of DeFi might go wrong? It’s so possible. For example, Synthetix’s contract is recognized as a relatively well-implemented project. It has also been audited and reused in a large number of other projects (of course it is safer to reuse the audited code than to rewrite the probability), such as yearn. The finance (YFI) contract code even contains redundant code copied from the Synthetix contract (can you copy the programmer’s work, not repeating the wheel), and various projects after YFI, such as YFII, YAM, Sushi, FARM, etc., naturally also re-use a lot of YFI code again
- Well, although Synthetix, YFI, YFII, etc. contracts are all audited, is it possible that there is a subtle loophole like Meltdown?
- If it does exist, because the degree of code reuse is extremely high, will it cause mass thunders in DeFi projects? If this happens, how does DeFi insurance pay?
- Or, is there possible loopholes in the insurance contract itself?
- Or, at a lower level, will the Ethereum network itself have exploitable vulnerabilities?
…
The current DeFi insurance format, especially NXM, is like a life insurance. All customers are 60-year-old grandparents who have just retired:
- Limited benefits in the first year
- Limited benefits in the second year
- The third year payment is limited…
Until the 20th year, Super Mario (Chinese male life expectancy is about 80 years).
Of course, the current compensation logic is that the “shareholders of the insurance company” decide whether to pay the final compensation or not. Perhaps if this happens, it may not drain the insurance fund pool.
But by then, how many people will continue to believe in and support this model?
alternatives
There are currently two modes: bifurcation and treasury mode.
Of course, you can also choose C to receive the loss.
Bifurcation
Ethereum Classic is the real Ethereum, no explanation (manual dog head
There are too many articles in this area. Search for the “The DAO” event by yourself. There is no need to repeat the wheel here.
Treasury model
MakerDAO initiates the mechanism of auctioning MKR in the case of insufficient mortgage, refer to 312 Maker’s solution to user losses.
Accept the loss
“I’m used to loss.”
A quote from an old friend of quote, a strong enough person can get used to the losses he can accept. If the insurance is really falsified, socialized losses become a norm and an option.
Welcome to the adult world.
reference:
[1] https://www.fehrsam.xyz/blog/crypto-native-insurance-defi
[2] https://www.chainnews.com/articles/495725830191.htm
[3] https://www.chainnews.com/articles/056744546259.htm
[4] https://www.chainnews.com/articles/621984593754.htm
[5] https://www.disruptordaily.com/blockchain-insurance-use-case-nexus-mutual
[6|] https://cointelegraphcn.com/news/defi-insurance
[7] https://www.blocktempo.com/defi-insurance-conceptnexus-mutualopyn/
Source link: kaiyuan.io
