Protocol level insurance for DeFi with no exclusions – the future of InsureTech? – SlateCast #20
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FairSide is a DeFi insurance protocol that aims to provide the most comprehensive and fairest insurance. It leverages its cost-sharing network to offer crypto users the same benefits as traditional financial insurance.
FairSide founder Brandon Brown said their approach to DeFi insurance is much broader than their competitors. The company offers subscription-based coverage to protect users’ crypto portfolios in a variety of events, including smart contract exposure and wallet attacks.
Therefore, their coverage extends beyond DeFi and is more similar to the insurance of a traditional financial portfolio.
Insurance without insurance
Another exciting thing about FairSide is that they don’t have insurance. Brown explains why:
“You have a membership agreement that describes what kind of losses we cover … we really don’t have to rule things out because we’re really confident in what we cover.”
For this reason, the company does not feel the need to document every policy. FairSide decides what they cover based on events, not based on amounts and numbers, Brown stated. Protocol voting for incidents that could cause significant losses, and if they decide to cover the event, it will be covered for all users.
As long as users can provide proof of loss that shows they were part of the exploit, their losses will be automatically covered by smart contracts. FairSide is constantly growing the list of covered events. Each newly added transaction is also added to all existing users.
FairSide utilizes its unique protocol called Network Staking, which refers to the possibility of staking the entire network in just one staking operation. The user commits the coins to FairSide’s capital bank and mints FSD, the initial token of the protocol.
The FSD token behaves synthetically for the capital pool, and the price changes algorithmically according to market conditions to maintain balances. FairSide’s website describes this functionality and says:
“Network Staking spreads the risk by spreading it over the entire network. Because there is no correlation to a specific project, the compensation paid causes fractional, permanent losses to stakeholders.”
FairSide wants to expand its protocol beyond DeFi and crypto. Brown said the team was aware of a large number of use cases that could take advantage of its protocol, and FairSide plans to implement them one by one in the future.