Fireside Chat Recap | Episode 12 | DeFi Insurance. What’s out there?

4 min readOct 28, 2021

Hi Steadies!

If you missed the previous episode of Fireside Chat, the show’s recap can be viewed here.

With the rise of DeFi Insurance options in the crypto industry, it’s important to discuss what each one offers and how they compare. We’ve seen multiple platforms providing this type of coverage over the past year — but how do they compare?

The team analyzes the benefits and limitations of DeFi Insurance providers today. They’ll explore how Steady State offers a superior solution that excels over our competitors, with enhanced peace of mind for users in this rapidly evolving market!

Intro (Silvia)

Silvia introduces the show and asks how everyone’s week is going. The show will discuss DeFi insurance in more detail.

Silvia: Who is the major player in the DeFi insurance space?

Brian starts by breaking down DeFi insurance into three types. There are mutuals like Nexus Mutual, which insure individual actors. Platforms like Insure DeFi offer better capital efficiency and staking incentives to improve on mutuals. They also focus on product-based insurance. Lastly, there are advanced players like BarnBridge, a marketplace for risk.

Akash joins in mentioning BarnBridge and Saffron finance are structured risk platforms used by institutions and professional traders. They use them to obtain long-term fixed rates of returns. He also adds decentralized derivatives as another type of insurance cover.

Akash asks Jon and Brian whether they’d consider prediction markets like Augur a type of insurance or price hedging platform.

Jon answers he does consider them hedging and risk insurance

Protocols.

Silvia: What are the benefits and limitations of DeFi insurance?

Jon joins in saying the limitations of platforms like Nexus Mutual is figuring out what even they ought to pay out to.

He adds this is a general insurance problem because if the criteria are too broad, the fund will get drained, and it will be hard to safeguard their interests.

If the criteria are too narrow, the protocol won’t trust the fund because they won’t know if they’ll receive payouts anytime soon.

He then talks about the first loss policy as a protection mechanism. And the method of taking premiums as well as flow returns.

Akash speaks on BarnBridge’s goal of growing the decentralized finance sector by creating derivatives, fixed yields, and complex instruments unavailable in other tools. It primarily focuses on just institutions rather than retail or individual holders. He discusses their largest issue: they get too complicated and token holders usually won’t have much upside.

Brian joins, saying the topic of DeFi insurance isn’t interesting to most people — adding what matters and is important is the DeFi insurance protocols deliver on the coverage and offerings they promise.

He says the insurance market is segmenting into business and individuals, with five of the top DeFi protocols carving out their unique niches.

Silvia: What is Steady State’s USP?

Brian starts Steady State’s USP is they we want to cover everyone simplistically. Say, for example, you are in a protocol or have an XYZ token in your wallet, you can rest assured your funds are covered because Steady State covers the smart contracts in case of hacks or exploits. It’s a socialized insurance model.

Steady State’s goal is to provide a clear pipeline for users to grow and build their ecosystem. It is a unique offering separating us from the market.

Good tokenomics, or the use of tokens to incentivize users for long-term engagement, is great for the growth of Nexus. This is because it means more people will be using and interacting with the protocol regularly. It’s also important to note Steady State is insuring individual protocols instead of covering entire protocols is one way to reduce downsides.

He also mentions you need to have a solid token offers multiple different value-ads and access to extra outputs so users can contribute to the community. You can receive multiple revenue streams is the key to success. Promoting the fact mentioning to users their funds are secure is a powerful narrative.

Jon adds Steady State will stand out because of its yield models and good tokenomics. Focusing on coverage index pools and building the community with Steady State’s tokenomics is the key to making it valuable.

Silvia: (User question) How will Steady State play a role in NFT projects?

Jon starts Steady State is unsure about going in the NFT direction because there are so many variables involved, such as who is insuring the community or the NFT or the object the NFT, or what bonuses and royalties come from using the NFT.

He mentions NFTs being an untapped market. They might not figure out what is important to the user and what to focus on.

Silvia: Closes by urging users to take part in the ambassador program.

Join us for next week’s episode of Fireside Chat where the team will discuss more of the latest and essential topics. We can’t wait to hear your feedback on these important conversations!

About Steady State

Steady State gives DeFi protocols and platforms a practical solution to safeguard their financial future. With the help of Chainlink Keeper technology, our platform aims to eliminate bottlenecks in DeFi insurance by using automated processes, shared coverage policies, and a cutting-edge risk analysis database. Steady State is creating a new paradigm for decentralized insurance by delivering DeFi’s best-ever insurance platform for protocols.

To learn more about Steady State and the impact of our pragmatic approach to Defi insurance, visit us at the links below:

Steady State cautions that statements in this communication that are forward-looking, and provide information other than historical information, involve risks, contingencies and uncertainties that may impact actual results of operations and prospective transactions.