A Detailed Narrative On The Decentralized Insurance Platform Development

Hello Entrepreneurs! Before stepping into a business, you will have to inspect whether the chief principle of your business will solve real-time issues. Generally, it is advisable to take up a contemporary problem that has been faced by commoners. In this 4-minute read, we are about to discuss the Decentralized Insurance Platform Development.

While Decentralized Platforms have been making news on the internet for its security, transparency, and other chief traits, it is susceptible to hacking. Over these years, we have been eyeing the blockchain network as an “unhackable” one. But some of the recent instances of hacking prove that the above statement is partially true. A blockchain network is “hackable” and it completely depends on its setup.  

Last year, i.e. in 2020, a total of $120 million USD was stolen on different decentralized finance platforms. And over the past years, similar instances have occurred. In order to carry away such shortcomings, the concept of decentralized insurance was developed.

What is the purpose of DeFi insurance? 

Since the decentralized blockchain network is vulnerable to hacks at times, it is necessary for users to safeguard their assets. As the saying goes, “every problem has a solution”, risks are inevitable but there are ways to minimize them. In this regard, Decentralized Finance (DeFi) insurance is introduced to help crypto investors to claim refunds if their holdings are subjected to theft.

The functionality of the Decentralized Finance insurance platform

First, let us take the example of traditional insurance providers and go through the risks involved in it. Further, let us peep into the working mechanism of Decentralized Finance Insurance platforms.

In traditional insurance companies, people will sign for an insurance policy with the company.  Now, the company is called the insurer, and the person who claims the policy from the insurer is called the claimant.

After signing up for the insurance, the claimant has to pay premiums monthly/ yearly. Of course, the premium amount depends on each insurer. Likewise, the insurer will pool the risks and provide insurance if the claimant suffers damage to his/her life, immutable, and movable property. .

• While traditional transactions in themselves are prone to risks, conventional insurance is also a risky one. Here, there is a huge concern of trust. The insurer might shut the services without prior information or simply run away.

• Another chief concern is the lack of proper management in the insurance company and the employment of non-professional staff.

• Most of all, one must look into the issues related to the country’s economy. If nations experience economic instability, then the insurance companies are the ones that will get directly impacted. 

• And finally, in the traditional insurance industry, the competition involved is quite high.

 Let us see how the DeFi insurance platform stands out from the traditional method. All the above-said shortfalls in the traditional method are not the case in the DeFi-based insurance method.

The degree of risks associated with the DeFi insurance is minimum to zero (which depends on the security features of the platform). Now, let us head to the functionality of the DeFi insurance platform. 

• The claimant will select the type of insurance plan they want. One can take insurance for protection against crypto exchange attacks, smart contract risks, multi-sig wallet issues, etc.

• From then, claimants must pay premiums, meanwhile, the insurer will keep pooling the risks of the policy holders.

• If the claimant experiences any loss of funds, then they can raise a claim to get the insurance.

On a shorter angle, there isn’t much difference in the functionality of traditional and DeFi-based insurance services. It’s all about security and trust, which is high in the latter.

What are the types of insurance policies available on the DeFi platform?

• Smart contract cover

The smart contract cover is essential because, at times when the address of the pre-programmed software gets hacked, the funds can be moved to another account (to the hacker’s digital wallet, which is an irreversible process ). Hence, users need compensation, which can be claimed via the smart contract cover.

• Crypto wallet insurance

Cryptocurrencies can be stored on a hardware wallet or a software one. If that crypto wallet gets hacked, then insurance against digital wallets would help protect funds.

• Collateral protection

Suppose a borrower gets funds from the lender but is not able to immediately pay for it. In those cases,  debtors will agree to provide a property in exchange for the principal loan. This is called collateral. If that collateral gets stolen, then the user can claim protection. 

Advantages of DeFi insurance platform

Let us take a look at the list of advantages one can get from investing in the DeFi insurance platform.

• Instant claim payouts depending on the number of tokens staked. 
• Policies for different types of hacks like the smart contract, crypto wallet, loss and theft of collateral. 
• Protection of investors’ funds from DeFi exchange platforms.
• The entirely safe and transparent method of claiming the insurance.
• Automatic processing of policies and hence no chances for human error.
• Non-custodial or without any control by government authorities.
• Chiefly, the whole process is time-saving.

 Decentralized Finance Insurance Platform Development – Now Is The Time

From the above broad narrative, you would have been planning to develop such a platform. Since the whole concept of the insurance platform revolves around security, you must develop an insurance platform that is intermediary-free and has military-grade security measures. 

You need a DeFi insurance platform development company like Appdupe as we infuse the best of best technologies to make the platform security-rich. Since we have more than a decade of experience in this field, we know the nook and corner of blockchain technology and products developed using it. You can give us a quick ring and we are waiting to assist you with our financial expertise.

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Marketing is my soul mate and writing is my side kick. Using my writing skills to share the knowledge of app development and upcoming technologies.