An exclusive look into the world of DeFi Insurance from the founders of the biggest projects in the space. They reveal their thinking around the UST de-peg and why they are already paying out.
The Twitter spaces event lasted around an hour and is available in full via the tweet below.
The space was moderated by Rupert Barksfield, Project Lead for Amulet Protocol. The conversation began with a discussion about the UST de-pegging event and whether it was avoidable. Hugh Karp, the founder of Nexus Mutual, began,
Supporting this argument, Robert Forster, CTO of Ease, continued, “I think the team could have easily capped their funds and not gone all in. Essentially, every DeFi protocol should focus on growing slowly. Furthermore, Forster thinking suggests that Terra grew too much too fast, and there was a failure of leadership not to cap that growth.
DeFi Insurance Benefits
To solve scaling issues, it is possible to artificially hold back growth to allow a proper assessment of all aspects of a project. Terra did not do this, and Forster seemingly believes this was their major mistake.
Kiril Ivanov, the co-founder of Bright Union, then commented on the silver lining of the event, notably, “DeFi insurance worked out… that’s great because it worked out at scale.” Several DeFi insurance protocols have already begun processing payouts for users. These payouts are for the users who held de-peg insurance policies.
Rupert brought the conversation over to Karp from Nexus Mutual. He did not offer a product to protect against the de-peg of UST.
“Yeah, we specifically looked at all the algo stables a while back, about a year ago, and specifically decided not to cover any of them. We just thought the risk was too high.
So, you know, that’s, I guess, looking like a good decision now… I’m not saying that we had a crystal ball or anything; we definitely didn’t. We deliberately chose not to cover it because we thought the risk was too high at the moment.”