Decentralized Insurance For DeFi Protocols Running On Elrond Network Via Tidal Finance
The DeFi landscape is built on innovations that tie into one another to create an increasingly complex financial ecosystem. The synergy of the different products and their integration brings a lot of value.
In order to preserve utility, as well as the liquidity locked into the various protocols, protection mechanisms are necessary. The entire landscape is almost exclusively smart-contracts based so the opportunity is to build an insurance layer into the DeFi ecosystem in order to safeguard it from unforeseen disruptive events.
This is why we are excited to collaborate with Tidal Finance, a decentralized discretionary mutual cover protocol that offers the DeFi community the ability to get insurance against failures in the various protocols.
“Hedging against risk is a key pillar of traditional finance. Transporting it to DeFi is critical for enabling large actors to take considerate positions in decentralized protocols, according to their profiles. Solutions such as Tidal Finance are essential for large-scale adoption.” said Beniamin Mincu, Elrond CEO.
Tidal offers DeFi participants the ability to get insurance or participate in providing insurance for various DeFi protocols. Mutual cover pools can be established and backed by stable coins from liquidity providers who earn rewards. Cover buyers can purchase the mutual coverage token for any specific protocol/token specified in any of the cover pools.
The collaboration will focus on expanding the Tidal platform to include DeFi protocols on the Elrond Network and allow eGold holders to get insurance and provide liquidity for Tidal cover pools.
“The Elrond DeFi 2.0 modules are extremely exciting and we believe that they are launching at an inflection point for the entire blockchain space. We’re happy to contribute insurance functionality and explore deeper integration into the Elrond ecosystem.” said Chad Liu, Co-founder of Tidal Finance.
The collaboration is important for the Elrond DeFi ecosystem as it enables participants to hedge against risks presented by DeFi protocols. This will, in turn, result in the ability to craft more inclusive risk-based portfolios and drive more participation.
Elrond is the internet-scale blockchain, designed from scratch to bring a 1000-fold cumulative improvement in throughput and execution speed. To achieve this, Elrond introduces two key innovations: a novel Adaptive State Sharding mechanism, and a Secure Proof of Stake (PoS) algorithm, enabling linear scalability with a fast, efficient, and secure consensus mechanism. Thus, Elrond can process upwards of 15,000 transactions per second (TPS), with 6-second latency, and negligible cost, attempting to become the backbone of a permissionless, borderless, globally accessible internet economy.
About Tidal Finance
Tidal Finance makes DeFi safer by providing insurance coverage for assets across chains in custom balanced liquidity pools. TIDAL is a Balancer-like insurance market built upon Polkadot that allows users to create custom insurance pools for one or more assets.
With Tidal, users can choose risk pools depending on their risk appetite and filter it through various protocols/assets and their coverage terms (premium, cover period, etc). Liquidity Providers, on the other hand, can invest in pools that suit their risk/reward ratio.
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