According to DeFillama, the TVL in DeFi has grown exponentially attracting global attention and adoption. 250% in the last 12 months. However, this explosive growth of the DeFi space has left huge loopholes in security.
Therefore, this vulnerability makes it possible for nefarious individuals to exploit this truly innovative yet nascent space. In this article, you will learn how you can protect your funds when you are using DeFi protocols.
Scams and DeFi
According to DeFiYield, over the last year, a total of $2,684,777,854 was lost to DeFi scams. This is quite alarming seeing as the DeFi space currently has a TVL of $224 billion.
In line with this, DeFi projects and individual investors are looking for ways to safeguard their funds. Some projects are looking to ramp up security by employing experienced developers and security experts. Others are looking toward reliable insurance options as a protective hedge for their funds.
Decentralized Insurance for DeFi
Decentralized insurance, as previously disclosed, is one of the reliable ways to safeguard your DeFi assets. There are currently several decentralized insurance protocols available. Here are some of the most important options:
1) InsurAce
InsurAce is a decentralized multi-chain insurance protocol providing all-round, reliable, and secure insurance to DeFi users. Since its launch, InsurAce has protected a total of 117 protocols. It also has a total value locked (TVL) of $43.7 million, and a total value covered of $266.7 million.
Source: Insurance
InsurAce is also known for providing security against risks like:
- Custodian risk
- Risk involving IDOs
- Stablecoin Depeg risks.
- Smart contract vulnerability risks.
Also, some of its protected protocols include; Loopring, Harvest Finance, SpiritSwap, Platypus Finance, Olympus DAO, ApeSwap, Alpaca Finance, Lido, Anchor, etc. The protocol also boasts of a governance token known as INSUR. Interestingly, INSUR is currently available on 6 different exchanges.
2) Bridge Mutual
Bridge Mutual is a unique DeFi insurance protocol providing its users with higher APYs and cheaper yet reliable insurance. The insurance protocol also recently launched its V2 version.
Source: Bridge Mutual
This version includes several features like:
- Capital Pool
- Leveraged Portfolio(s)
- Shield mining
- BMI Widget
- Reinsurance Pool, and
- BMI Mobile Version
3) Nexus Mutual
Nexus Mutual is also known as “a people-powered alternative to insurance.” The ETH-based platform provides coverage against hacks and smart contract failure. Also, it is designed in such a way that people have to share risks among themselves. Therefore, eliminating the need for a conventional insurance firm.
Source: Nexus Mutual
In conclusion, the issue of security requires a lot of attention. For the DeFi space to continue to grow, there is a need for an affordable and lasting solution to the issue of DeFi hacks, scams, and protocol downtime.
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