Following rapid growth, over $60 billion is now locked up in DeFi smart contracts, representing a sixty-fold increase in the last year alone. While impressive, it highlights the increasing need for affordable insurance cover in the space to protect against potential hacks, failures, and exploits.
All smart contracts are susceptible to these risks. External security audits can assist in the due diligence process, but if the industry is to scale to mass adoption insurance services will be required to provide more comprehensive risk protection.
Decentralized insurance protocols such as Nexus Mutual have made great strides in enabling community-owned DeFi protection cover, retaining the ethos of the sector by disintermediating insurance from centralized entities and rewarding stakers instead. However, the availability and affordability of cover is therefore limited proportionally to the number of protocol participants, and overall decentralized insurance currently only covers 2% of the total value locked in DeFi.
iTrust sets out to solve this, building a unique yield-optimizing application to increase decentralized insurance protocol adoption and scale to the needs of the whole DeFi market.
Unpacking iTrust’s Solution
iTrust is a layer 2 DeFi insurance yield aggregation platform and Decentralized Autonomous Organization (DAO) that allows anyone to earn low-risk yield for underwriting decentralized insurance.
iTrust provides a one-stop-shop Yearn.Finance-style automated solution to access insurance-based DeFi yields by staking in various low-risk maximum-reward vault pools. This includes staking $NXM and $wNXM tokens in Nexus Mutual risk pools from launch, with additional decentralized insurance protocol staking pools added over time.
iTG operates as the native governance token for the protocol with a finite supply of 100 million tokens. Every iTG holder is a member of the DAO by default, rewarded with iTG for actively participating in protocol decision-making focussed on efficiency, risk-managed returns, and platform simplicity. iTG also provides an additional incentive reward to stakers, receiving a share of iTG proportional to the amount staked as a form of liquidity mining.
iTrust, therefore, allows users to earn yield via a low-risk staking approach, maximizing under-utilized leverage in the DeFi insurance market, and managed by its own community.
How Does It Work?
iTrust vaults manage investments using yield farming algorithms that automate the process of finding the best returns. By continuously scanning decentralized insurance smart contract protocols, it can assess the respective risk/reward ratios and dynamically allocate funds to optimize yields for the lowest risk and maximum reward.
As a result, iTrust builds the supply of decentralized insurance cover capacity by incentivizing the staking of under-utilized DeFi insurance protocol tokens to underwrite it, enabling lower premiums and increased adoption. It also maximizes the return for the stakers who are doing the underwriting by solving the risk and usability flaws in existing insurance protocols.
The simplicity of iTrust’s platform ensures the staking process is straightforward. Users simply connect their own non-custodial wallet, such as MetaMask, and add liquidity to their preferred staking pool contracts. Users receive pool tokens in return representing a 1:1 receipt, earning both staking and liquidity mining rewards while staked. The pool tokens can then be burnt after a 30 day lock period for users to redeem staked funds back to their wallets.
iTrust is set to be the first risk-managed staking protocol to tap into the under-utilized yield potential of decentralized insurance smart contracts. By expanding cover capacity, iTrust helps ensure a more sustainable DeFi ecosystem and allows the platform to integrate other untapped DeFi yield markets and services, driven by the collective decision-making of the community DAO.
Having already partnered with Nexus Mutual to provide staking solutions for its users, iTrust is also integrating Trustologies insured and non-custodial wallet solution, as well as Finance. Vote’s gamified dApp for liquidity provider token holders during the next stage of its platform evolution. You can learn more about iTrust at iTrust.finance.
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