Etherisc offers investors protection

A new stablecoin insurance hits the market. Provider Etherisc wants to offer investors of tokens with stable value additional security. The concept works decentrally. Other providers are already marketing similar services that are extremely popular.

Stablecoin insurance is popular

Stablecoins are among the most popular currencies in the crypto market. Here they take on many important tasks. Although the tokens are stable in value – as the name suggests – there are always price fluctuations.

To offer users even more security, there are more and more service providers and platforms that offer stablecoin insurance. These include providers InsurAce and Nexus Mutual .

Insurance from InsurAce already exists on 20 different blockchains. Different stablecoins are covered – such as USDT, USDC, BUSD or MIM. Currently, 380 million US dollars are insured. Almost 12 million US dollars have already been paid out in the event of damage.

Nexus Mutual currently underwrites $80 million and has already paid out over $17 million to users. However, both platforms only serve as an intermediary, not as a direct partner.

They provide marketplaces where users can act as insurance companies or as policyholders. Both parties then agree on certain conditions. If the value of a stablecoin falls below a certain value in a certain time frame, the policyholder receives compensation from the insurer in another stablecoin.

To ensure the reliability of the data, the platforms use blockchain oracles like Chainlink. If damage occurs, the injured party can receive compensation with a simple click of the mouse.

Etherisc: New stablecoin insurance released

Just how popular stablecoin wealth insurance is can be seen by looking at the InsurAce marketplace. Some offers are already sold out. Other providers provide hundreds of thousands of dollars in insurance coverage.

Insurance policies usually vary in price between 0.0070 and 0.01 percent per day. The offers are usually anything but cheap. Nevertheless, the demand is great enough for another provider to join the competition.

The new Etherisc service uses the same decentralized structure as its predecessors, which have been active on the market for several years. Initially, they only support USD Coin insurance. Compensation must be paid with the competing currency Tether.

A claim could arise, for example, if “USDC is 0.5% below the value pegged to USD 1 for a period of more than 24 hours.” This is how the developers explain to Blockworks. Users then have seven days to claim compensation.

A smart contract then calculates how high the compensation will be. This adaptability is so important because the second stablecoin could also deviate from the exact US dollar value.

Prospects must insure a minimum of $2,000. The offer, which has so far been limited to USDC, is to include other stablecoins in the future.

Etherisc founder and managing director Christoph Mussenbrock wants to bring more stability to the market. The idea was particularly encouraged by the current banking crisis, which temporarily caused losses of up to 12 percent for the USD coin .

“The purpose of stablecoins is to provide a predictable haven in the volatile world of cryptocurrencies. We saw a clear gap in the market for stablecoin protection and the launch of Depeg coverage on Etherisc brings instant peace of mind to customers and their USDC deposits.” Explains Mussenbrock.

Because providers like Etherisc have no legal legitimacy to use the term “insurance,” providers are careful with the term depending on their location.