In 2020, decentralized finance (DeFi) application usage exploded, with the current total value locked (TVL) in DeFi over $27.5 billion.
This influx of funds led to an increase in hacks and exploitations against defi and centralized platforms. As a result, market participants are calling for a decentralized insurance product.
Firms raced to create a usable product. Nexus Mutual was praised for first mover advantage, bringing a peer-to-peer decentralized insurance platform to market. Since then, though, projects like Polkacover and Insured Finance followed.
However, one day after its Token Generation Event and Initial DEX Offering, Bridge Mutual tops the DeFi insurance market. Currently trading at $2.12 per BMI, Bridge Mutual has a fully diluted market capitalization of $350.4 million. This comes after almost $42 million in volume before the end of the second trading day. It overtook Nexus Mutual’s fully diluted market cap of $274.4 million according to its total token supply.
What Makes Bridge Mutual Different?
DeFi insurance platforms to date have been able to cover two sectors of the space: smart contracts and centralized exchanges. Nexus Mutual recently expanded into the latter. In addition, Bridge Mutual offers insurance for stablecoins, which have $35.1 billion TVL across more than 30 coins.
This opens up a whole new insurance market for Bridge Mutual stakeholders. It enables users to give and receive insurance within more pools. With hundreds of millions of dollars lost last year to hacks and exploitations in the still highly unregulated DeFi market, insurance platforms may be the best option for users to protect their funds deposited across new platforms.
How Does Bridge Mutual Operate?
Bridge Mutual is a discretionary, decentralized peer-to-peer or peer-to-business insurance platform that offers insurance against losses from hacks or vulnerabilities in smart contracts, cryptocurrency exchanges, and stablecoins. Users are able to provide insurance to others directly, with the opportunity to negotiate fair insurance payouts and earn a payment in BMI for adding value to the ecosystem. This will allow users to get smart contract regulated insurance and for everyday people to become insurers and earn a yield on deposits. This creates a system that was previously only available to corporations.
Decentralized Insurance Has a Bright Future
Although a very new aspect of the decentralized finance economy, decentralized insurance options are poised to grow alongside increasing DeFi platform usage. Users and businesses need a way to protect their funds, and decentralized insurance offers a seamless way to add another layer of safety across blockchain applications.
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