The TVL in DeFi currently stands at over $250 billion. Yet, more than 95% of it remains uninsured. This poses a huge risk to users’ capital as the DeFi space is fairly new and smart contracts can very often contain bugs and incorrect logic which can lead to hacks and theft of funds. Research shows that these losses are accelerating. Over $10.5 billion has been lost in 2021, up from $1.5 billion in 2020.
That said, it is crucial to understand that DeFi insurance is an emerging sector which offers solutions to effectively protect user assets against hacks and thefts. With the growing realization of the safety of assets on decentralized systems, people are leaning toward these services. This has led to over $1.6 billion worth of assets now being covered by these insurance services.
The problem, however, is that most of these solutions are specific to certain assets, protocols, and blockchains, making it highly complex for users to effectively cover their overall risks across assets and protocols.
Offering a solution to that is Bright Union, a comprehensive multi-chain DeFi insurance aggregator with 170+ DeFi insurance protocols available on its platform. The platform has partnered with three of the top DeFi insurance providers – Nexus Mutual, Bridge Mutual, and InsurAce, who have collectively sold 98% of all covers and have paid out over $10 million in claims.
Providing Cover Liquidity in DeFi Insurance Industry: Staking with a Business Model
Currently, the biggest challenge for the DeFi insurance providers is, however, on the supply side: the lack of available capital. Due to the limited capital available, insurance for the in-demand protocols, like Anchor Protocol, which provides a generous 20% APY on USDT, is often sold out. The same goes for popular protocols Aave v2, Mirror, Convex, where a shortage of cover liquidity exists.
The capital is provided by the crypto community who wants to underwrite certain risks for specific protocols and to receive a premium for “being the insurer”. At the moment, there are certain drawbacks for providing capital to underwrite insurance covers, leading to poor availability of insurance, like high gas fees, poor liquidity of staked capital (due to unstaking and cooling-down periods), and limited diversification as underwriting insurance covers is usually done one a 1 to 1 basis. For DeFi insurance to really grow exponentially, these obstacles need to be removed.
That is why Bright Union will release the Bright Risk Index, the most secure and diversified investment opportunity in the DeFi risk markets. Bright Union will pool the invested capital in the Bright Risk Index and use it to underwrite insurance covers in the most diversified manner possible (diversified over risk platforms, over underlying protocols, and over underlying locked currencies), the BRI represents a pro-rata ownership of the Index underlying assets, generating a stable and safe return which is automatically compounded in the BRI.
Long story short; max return, with minimum risk underpinned by one of the oldest business models in the world: insurance.
Get Exclusive NFTs and Rewards as an Early DeFi Insurance Investor
To make things even better, Bright Union recently launched a loyalty program that allows stakers of the BRIGHT token to earn rewards in the form of loyalty cashback, reward boosts, and rare crystal NFTs.
Stakers of BRIGHT tokens will get early access to the Bright Risk index, and they will be able to profit from a reward booster that will range between 2% to 15% annually on top of the regular BRI return.
Bright Union provides the widest selection of DeFi covers at the lowest price. Additionally, users who stake BRIGHT can also enjoy an additional cashback on their covers between 10% to 40%, until the end of 2021.
As part of its loyalty program, Bright Stakers will be able to claim 263 exclusive NFTs to be released by Bright Union. The more significant the user’s contribution in staking BRIGHT tokens, the bigger, rarer, and more valuable their crystal NFT will be.
With the launch of its loyalty program, Bright Union seems to have added more credibility and strength to its token utility. This will help Bright Union create a positive feedback loop for the long-term benefit of its community and the network’s slated vision across its chosen DeFi utility of being insurance aggregators.
Staking rewards form a core part of every DeFi application. What differentiates Bright Union is its consistent yield generating ability, due to the sustainable nature of the insurance business. For instance, a majority of DeFi users are not aware that most of their yields are coming from a token’s inflation schedule. However, insurance protocols can enable insurance capital providers to be rewarded by insurance buyers in a sustainable way without needing to increase the supply of their tokens drastically.
Toward a Safer, More Rewarding Future for DeFi
More than $12 billion of user funds have been lost due to vulnerabilities in smart contract codes to date and these losses are accelerating. This is why the role of comprehensive solutions, such as Bright Union, are so important in this space. With the launch of its loyalty program and risk index, Bright Union has once again proven that it’s a platform focusing entirely on the goodwill of DeFi users. With the increasing demand for risk covers, Bright Union is ideally placed to lead the charge in offering the most comprehensive DeFi risk mitigation solution for both users and institutions.