Unslashed Finance, an Ethereum-based decentralized insurance protocol, has raised $ 2 million to fund its tokenized insurance product, highlighting another positive use case for blockchain technology.
The funding round, led by Lemniscap, P2P Capital and other investors, will help Unslashed Finance expand its decentralized insurance protocol for crypto assets. The protocol connects people willing to get insurance for their assets and investors looking for an uncorrelated return.
Inconclusive claims that his protocol provides “almost instant liquidity for insurance buyers and underwriters” as well as ongoing collateralization. By tokenizing the insurance protection, the platform enables the insured person to pay on the go or simply to outsource the insurance protection when he no longer needs it.
Insurance covers exchange and smart contract hacks, validator slashing, stablecoin pegs, oracle failures, and other types of risks that traditional companies don’t insure.
Since its first private launch in February, Unslashed Finance has sold $ 400 million in insurance coverage and raised $ 90 million in capital contributions. His clients include ParaSwap, Ethereum Lido Finance, Enzyme, Techemy Capital and others
“The growth was purely organic,” Marouane Hajji, founder and CEO of Unslashed, told Cointelegraph. He stated that around a third of insured buyers are self-protecting protocols, 20% are crypto hedge funds, and the remainder are DeFi power users.
Regarding the future of blockchain insurance products, Hajji says that the banking and insurance industries are “slow moving in terms of new technology.”
“Although some insurance companies experimented with public and private blockchains quite early (2015/2016) and McKinsey published a report explaining how blockchain could have multiple use cases in the insurance industry, these are real applications for public blockchains, not the more traditional focus Industry players. “
The blockchain-based insurance industry appears to be growing in the face of the DeFi boom as more users seek protection against centralized exchange hacks. At the moment, coverage is quite expensive, although this could change as the market further matures.
Credit card issuer American Express has even commented positively on the cryptocurrency insurance market, but noted that large issuers are taking a very cautious approach. The concern arises from the fact that cryptocurrencies like Bitcoin (BTC) are effectively a bearer asset, like cash, that entitles the owner to the asset’s underlying value.
“As a result, when someone’s bitcoins are stolen, it is difficult to establish legitimate ownership without actually owning that bitcoin,” said Justin Grensing of American Express.