Altcoins Talks - Cryptocurrency Forum
Archive => Sorting Box => Topic started by: Alex Prochers on September 04, 2022, 09:17:49 PM
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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.