This project allows for a completely new type of DeFi primitive: trustless insurance. Current insurance solutions in the defi world such as nexus mutual require users who are insuring the smart contracts to vote on hacking outcomes. Our team feels that this represents a conflict of interest as the people who are underwriting the insurance have a vested economic interest in not paying out claims even when there is a legitimate claim scenario according to the terms. Our solution solves this conflict of interest in the DeFi insurance space by completely automating the claims and evaluation process of figuring out if a DeFi project has been hacked with smart contracts that can detect hacking events. Once a hacking event has been detected a user submits a claim, and if the claim is valid, the user is paid out automatically by the underwriters of this insurance market. This claims process is deterministic and non-biased. It only cares whether or not your money was stolen. If your money was stolen from a smart contract and you had insurance, you get paid a settlement based on the amount of assets you insured.
How It's Made
To build this project, we used solidity, openzeppelin for our safemath libraries and ERC20 tokens that we use to represent the insurance purchased. We also integrated with USDC so you can purchase insurance with your stablecoins. For the people who underwrite insurance, we allowed them a multitude of choices for types of currencies they can provide for underwriting. Long term, this protocol will become a marketplace for insurance where both sides of the insurance market, underwriters and buyers, can choose what types of insurance they sell and what kinds of insurance they buy. There will be a large mix of different insurance products available paid out in different types of cryptocurrencies. In order for someone who purchased insurance to make a claim, they follow a three step process via the UI to submit the transactions. Once all checks have passed with these transactions, they receive a payout in the currency that this insurance market is settled in. For example, if they insured themselves in USDC, then when they go to make a claim, they will receive USDC when their claim has been successfully processed. Claims are processed and assessed with smart contracts that are completely trustless and have no bias.