Amulet Protocol common information

[Alex Prochers]

Amulet Protocol (hereafter referred to as Amulet) is a decentralized insurance

protocol built for the Rust-based ecosystem, starting with the Solana

blockchain. Amulet has designed an innovative and open insurance model,

which not only effectively addresses the common challenges of existing

decentralized insurance protocols, but also creates a new paradigm shift for

the whole insurance sector. Risk underwriting and insurance claim lies at the

core of any insurance business; however, all existing decentralized finance

(DeFi) insurance protocols have been facing a critical sustainability challenge

for risk underwriting and claims. Amulet is creating the industry’s first

Protocol-Controlled Underwriting (PCU) approach, in which Amulet will build

up its own underwriting capabilities and introduce a claim structure involving

a unique Yield Backed Claim (YBC) method. This is a significant deviation

from the incumbent insurance models of renting underwriting capability from

capital providers to a more sustainable underwriting and claim structure

controlled by the protocol. Amulet is creating the industry’s first

Protocol-Controlled Underwriting (PCU) approach, in which Amulet will build

up its own underwriting capabilities and introduce a claim structure involving

a unique Yield Backed Claim (YBC) method. This is a significant deviation

from the incumbent insurance models of renting underwriting capability from

capital providers to a more sustainable underwriting and claim structure

controlled by the protocol.


Introduction

DeFi has been unstoppable since the summer of 2020, with Total Value

Locked (TVL) growing 27x from $9.7B in Sept 2020 to $261.2B as of writing.

With the growing market size, the demand for risk hedging is also

experiencing its own growth phase. Crypto users often suffer loss from

various threats, such as security hacks to smart contracts, stablecoin

de-peg, market volatility, etc. In 2021, security hacks alone caused over $3B

in losses. Among all risk hedging tools, insurance has become the most

prominent and effective approach to manage these risks. Although we have

seen an increasing demand for insurance products, currently less than 2% of

overall DeFi TVL is covered by insurance. There is still a large coverage void,

creating the need for more insurance protocols. Despite Ethereum and its

affiliated EVM (Ethereum Virtual Machine) ecosystems’ domination in DeFi,

other Rust-based public chains are rapidly maturing, spearheaded by Solana.

According to our research, TVL on Solana is growing 5x faster than

Ethereum, and this growth is expected to be stronger given the distinctive

strengths of Solana centered around lower cost, higher throughput, and

strong potential for Web3.