DeFi Insurance: Managing Risks of Digital Assets
Understanding DeFi insurance and its importance in mitigating DeFi risks and threats.
Playing the video that you've selected below in an iframe
In this blog, you will learn about the DeFi, how it works, and its pros and cons.
DeFi is an abbreviation used to describe decentralized finance that runs on blockchain technology. To put it in simple terms, a financial system that operates on automated processes built on the blockchain without the management of a central exchange.
As of January 25th, 2022, the total value locked in DeFi platforms across the world is a whopping $194B which is approximately a 530% rise from Jan 25, 2021 at around $30.8B. This figure denotes the total amount of money locked by millions of users into a decentralized, transparent and secure technology that is not run by any single individual or organization. It has multiple use cases like cryptocurrency, NFTs, assets, lending, insurance, trade exchanges and more.
So far, traditional financial systems are either run by governments or central organizations. They have direct control over what goes on with these systems.
DeFi breaks this system of centralized control, it makes the system accessible for anyone to contribute, and decentralizes governance to the community that participates in the system. Users stake their investments for the benefits of profitability and autonomy. They join in the long-term sustainability of the system by being transparent and reliable.
While DeFi is in its starting stages, and so far unregulated, it promises to be at the leading edge of change in the financial system in the long run.
We are excited to share the Neptune Mutual parametric cover product to make DeFi a safer and more protected environment for our community.
Have more inputs to share with us? Do let us know in the comments.