Several Use Cases
Unslashed can cover many different types of risks and be suitable for several types of cover buyers. This leads to a wide range of use cases:
- Stablecoin Pegs: stablecoins are pegged to a cryptocurrency, fiat money, or to exchange-traded commodities. It happens that they trade above or below their peg. The dedicated policy listed on Unslashed compensates the loss occurring when a stablecoin loses its peg and trades below a given Time Weighted Average Price (TWAP) in a predetermined timeframe.
- Custodians: a custodian is an entity that safeguards or holds a user’s funds. This type of coverage protects against a direct hack/draining of the funds held by the custodian. When the custodian is already insured (which is the case for Coinbase Custody, BitGo and Ledger Vault), the policy listed on Unslashed would specify that it will only compensate the losses in excess of the Custodian’s insurance policy.
- Wallets: a wallet is anything that stores a user’s funds without the use of a custodian. It can be a hardware wallet or a software wallet. Unslashed policies in this category would cover large scale exploits in the product’s firmware or software.
- Exchanges: an exchange is an entity that provides custodial services, but also provides a marketplace for trading to take place. Exchange hacks happen, and often result in loss of user funds unless reimbursed by the exchange itself. Our policies regarding exchanges would cover hacks and political events (governments seizing funds for example). The policy listed on Unslashed will specify that it would only compensate the losses that might have not been compensated by the Exchange’s insurance fund.
- DAPPs: DAPPs, or decentralized applications, are products that are built on various blockchains that allow the user to perform operations on-chain. They are based on smart contracts that can have vulnerabilities which often result in the loss of user funds.
- Slashing: validators exist to verify incoming on-chain transactions and secure PoS (proof of stake) blockchains. On PoS blockchains, the assets staked can be slashed if the validator misbehaves (breaking network consensus, node downtime or double-signing).The slashed percentage represents a penalty for ineffective validation and varies from one network to another and from one type of misbehaviour to another. It results in a loss of funds for validators and, subsequently, for entities staking with these validators.
- Oracles: oracles are essential to many DeFi platforms. They provide a price point in which many contracts call upon to retrieve price data in real time. A malfunction in a price oracle would be an example of a covered event. Any losses incurred by the users in such an event would be covered by Unslashed.