Expanding BNB Application, Mutual Insurance Platform Soteria Will Become the Protector of BSC DeFi
Since the beginning of this year, DeFi has become popular in the blockchain industry. DeFi offered chances for many users to become rich overnight, yet it have also attracted the attention of many hackers, the frequent property losses caused by the attacks are affecting the stability of the market and the security of market participants’ assets. Under this background, people began to focus on the DeFi insurance, hoping that the insurance sector could participate in the establishment of the DeFi Lego ecosystem and provide customers with protection methods.
On December 14, the personal address of the founder of Nexus Mutual, a popular insurance project, was attacked, and 370,000 NXMs were stolen. Soon after the NXM accident, Cover, a heated project with the help of the AC Lego Empire, also suffered from attacked. After being hacked, the price of Cover’s token plummeted from over $700 to a minimum of $9. Fortunately, the theft of NXM is a personal private key and computer security issue, instead of a problem with the insurance model design or a loophole in the related insurance contract.
The two incidents triggered public discussion on the security protection function of insurance projects. Recently, Soteria, a new insurance DeFi project, will officially launch the market in the coming days. Aiming to protect DeFi, can Soteria solve the security problem of the insurance field? Can it drive the future development of DeFi insurance?
Soteria Aims to become DeFi Protector
Soteria is a mutual insurance platform that can provide insurance for losses caused by vulnerabilities in smart contracts and hacker attacks, and then provide risk protection for DeFi products. Soteria is a community-based insurance platform. By staking tokens, users are both gainers and risk bearers. At the same time, token holders can use the tokens they hold to determine how much insurance coverage a project can have and whether to approve claims.
Staking tokens reflect members’ recognition of the safety of the project, and the amount of pledged tokens also determines the purchase limit of the project. The approval of the claim application is determined by the token holders through votes that requires locking the tokens. If the option opposite to the final result is selected, the tokens will be locked for a longer time.
Similar to traditional co-insurance companies, Soteria adopts a co-insurance model to collect funds from policy holders, and members form a community to share risks and share premium income. The amount of funds held by the community, that is, the capital pool is used for insurance claims. On the one hand, the funds in the capital pool come from the direct injection of the insurer’s purchase of token funds, and on the other hand 50% of the funds purchased by the policy holder will be injected into the fund pool. When compensation occurs in a certain contract, the SOTE token pledged in the contract will be first destroyed to pay compensation. If the pledged SOTE cannot fully cover the compensation, other funds in the fund pool will be used for compensation. Therefore, although users pledge SOTE for different contracts, the insurance fund pool is ultimately shared by all contracts.
Different from other insurance projects, Soteria’s economic model stimulates public participation in risk protection capital, and MCR (Minimum Capital Requirement) guarantees that when a claim occurs, it can be fully paid. The formula in the smart contract sets the SOTERIA price to be linked with the risk protection capital. The more adequate the risk protection capital, the higher the SOTE price. As capital decreases, the price of SOTE will decrease, but it still needs to meet the minimum requirement of MCR%.
Under this logic, as long as the platform can incentivize more users to pledge tokens, the value of SOTE tokens will be increased, and the purchase demand will increase sharply, realizing the positive cycle of the Soteria ecosystem, promoting the development of the platform, and further protecting the DeFi ecosystem development and the benefits for users.
Based on BSC, Soteria will Fill up the Insurance Gap in Binance
Unlike NXM, the ecological integration of Soteria and Binance Smart Chain is closer, as Soteria will be running on BSC and directly using BNB as funds for insurance purchase and claims settlement.
BSC’s transaction speed, security, low cost, and EVM compatibility make it a competitive DeFi public chain, attracting many high-quality projects. Binance Smart Chain has become home to nearly one hundred DeFi protocols in just a few months after its launch. The accumulated locked assets are worth hundreds of millions of dollars. Among them, dozens of mainstream digital assets have been on the Binance Smart Chain through the Token Canal Project and Panama Project, including ETH, XRP, LTC, BCH, LINK, DOT, etc. At present, each type of digital asset has reached thousands to tens of thousands of holders and has a wide range of applications. In addition, there are emerging projects, such as BAKE, CAKE, and BURGER, focusing on various micro-innovations in the fields of Swap and liquidity mining. These have contributed to the ecological construction of BSC and stimulated the development of ecology.
However, there is no insurance applications on BSC, which undoubtedly limits the composability of the product and is not conducive to the formation of DeFi Lego. In addition, in view of the recent insurance project security incident, the safety of DeFi products has become an important area of innovation in composable products. Currently, certikshield can initially supports smart contracts on the Binance Smart Chain, yet Soteria will be the only insurance platform that runs on the Binance Smart Chain and uses BNB as guarantee and claims assets. Through in-depth integration with Binance Smart Chain ecology, it can greatly stimulate the application scenarios of BNB and accelerate the rapid development of Binance DeFi ecology.
In all, Soteria’s launching the market can undoubtedly open a new era for BSC. While ensuring the safety of other DeFi projects, it will stabilize DeFi currency prices, increase investor confidence, and further promote the integration and collision of other projects.
Recently, Soteria’s official website has been officially launched: https://soteria.finance/#/, after redirecting to https://app.soteria.finance/, users can register as a member and use BNB to exchange SOTE tokens.
Soteria officially launches the market on January 13rd. Can Soteria, the first insurance project on the Binance Smart Chain, occupy the market share and stand out in the competition? Let’s wait and see.
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