crypto insurance projects

Crypto Insurance Projects to Closely Follow Now

Data collected by Finaria.it showed that $1.9 billion worth of cryptocurrency was lost in 2020 through fraud, theft and ransomware. Although the figure was down from $4.5 billion in 2019, it is still very alarming. That is why several crypto insurance projects have cropped up in recent years to shield investors from such losses. 

Within the DeFi community, crypto insurance projects are rarely the highlight compared to others. Nevertheless, considering that the global insurance industry generated total gross written premiums of $5.8trillion in 2020, it’s a space worth delving into. 

A small number of companies have already begun to do so, and these are the ones we think are worth following today.

Nexus Mutual

Among the handful of crypto insurance projects today, Nexus Mutual has been the most prolific. Not only has it proven to be effective, but it has also had practical uses for crypto investors in the past 2 years. The first payout was made in February 2020 following an attack on the digital lending platform bZx. $31,000 was paid out during the incident. 

Nexus Mutual provides coverage for smart contracts and crypto exchanges in case of theft or failure such as the case with bZx. Funding for the insurance mutual is provided by members of the community through purchasing the NXM token. 

While speaking to Instech London in August 2021, founder and CEO Hugh Carp mentioned that total active coverage is above $400 million. This is not hard to imagine given that the NXM token has a market cap of over $800 million and is ranked 213th on CoinMarketCap. 

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Aside from the success of the project, Nexus is remarkable because it has made insurance claims decisions communal. All claims are handled by community members through staking their holdings in NXM. Moreover, the process is transparent rather than bureaucratic as is the case with traditional insurance today.

inSure DeFi

Also relying on community, inSure DeFi takes a slightly different approach toward the process. Unlike Nexus Mutual where community members place their stake on individual claims, all funds in the inSure network are stored in a liquidity pool. 

Anyone who contributes to the pool by purchasing the SURE token becomes a member and can participate in decisions on insurance claims. These tokens are considered to be a stake in the project and holders can earn up to 35% APY or 5% in monthly rewards. Alternatively, investors can purchase the token from exchanges such as Uniswap, PancakeSwap and QuickSwap. 

At the same time, membership in the community provides insurance cover for your crypto in case of theft, scams or devaluation. In the above screenshot, you can see what percentage is paid out for each scenario, so you shouldn’t expect to receive 100% of the value of your crypto. Nevertheless, it’s good to have some protection for your coins in such cases. 

Etherisc

While the two previous crypto insurance projects are aimed at protecting crypto assets, Etherisc has taken a broader strategy. The project is targeting traditional areas covered by insurance companies such as hurricane protection, flight delays and crop insurance. In addition, it has introduced social insurance for personal emergencies while also covering crypto assets. 

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So far, only flight delay insurance and crop insurance are active. That being said, both have been successfully launched and are already in use. For instance, a collaboration with Chainlink has enabled Etherisc to provide insurance to over 1.7 million farmers in Africa and Southeast Asia. Farmers contribute as little as $0.50 to receive coverage and the project aims to receive between $6 to $10 billion in annual premiums. 

Although crypto protection is not yet active, Etherisc is definitely worth following closely because it has proved to be effective. 

CDx

Aside from offering insurance for crypto assets, CDx takes it a step further by tokenizing the insurance cover. This makes it possible to trade the insurance tokens through swaps in the open market. For example, if you own insurance on 100 ETH held in Binance, you can sell that insurance cover if you feel confident that neither the coin nor exchange will fail. Doing this creates an exciting market similar to the derivatives market on Wall Street.

However, during our review, we were unable to verify that the project is active as there is no website… only social media groups. Therefore, we wouldn’t recommend getting into CDx at the moment but the project was interesting enough to peak our interest. 

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