Bridging the Gap: How LI.FI and InsurAce are Collaborating to Provide Safe Transactions in Decentralized Finance

04/19/2023 16:58 • Digital Disruptors • 91 views

According to reports, LI.FI is collaborating with InsurAce to develop “bridge insurance” to provide protection for hackers, malfunctions, and vulnerabilities, otherwise it will deplete users’ funds. According to the agreement documents, InurAce’s products can protect losses caused by “slip point errors” in decentralized exchanges participating in transfers.

LI.FI and InsurAce collaborate to develop insurance tools

The advent of decentralized finance (DeFi) has unlocked a world of possibilities for investors and innovators, allowing for peer-to-peer transactions without the limitations of traditional financial intermediaries. However, as the market evolves, so do the threats and risks that come with it. Hacks, vulnerabilities, and malfunctions are just some of the issues that can deplete users’ funds, and the lack of insurance has become a major concern for both investors and operators in the DeFi space. To address this issue, LI.FI and InsurAce are collaborating on a revolutionary new product: “bridge insurance”.

What is Bridge Insurance?

Bridge insurance is a new type of insurance that covers blockchain-based transactions. Specifically, it provides protection against hacking, malfunctions, and vulnerabilities that can cause losses for users of decentralized exchanges. In other words, it acts as a bridge between the gap in protection that exists in DeFi, and traditional financial services.

How Does it Work?

The idea behind bridge insurance is to provide coverage for “slip point errors” in decentralized exchanges, which are essentially transactions that fail midway due to technical issues. This insurance will protect users against losses incurred from these errors, ensuring that their funds are safe.
To make this possible, LI.FI and InsurAce are collaborating on the development of smart contracts that can automatically trigger insurance coverage for users who are affected by slip point errors. These smart contracts will be added to the existing infrastructure of decentralized exchanges, seamlessly integrating insurance into DeFi transactions.

Who Benefits from Bridge Insurance?

Bridge insurance is beneficial to both investors and operators in the DeFi space. For investors, it provides peace of mind, knowing that their funds are protected against unforeseen events that can result in losses. For operators, it provides a competitive advantage, as it enables them to attract more investors with the promise of safe and secure transactions.

Conclusion

As the DeFi space continues to expand and evolve, it is imperative that necessary measures are taken to ensure the safety and security of users’ funds. Bridge insurance represents a promising solution that addresses the gap in protection that currently exists in DeFi. By collaborating on the development of this innovative product, LI.FI and InsurAce are paving the way for a more secure and reliable DeFi ecosystem.

FAQs

Q1. Is LI.FI a DeFi project?
A1. No, LI.FI is not a DeFi project. However, it is collaborating with InsurAce to develop bridge insurance for decentralized exchanges.
Q2. What are slip point errors?
A2. Slip point errors are technical issues that occur during transactions in decentralized exchanges, which can result in losses for users.
Q3. How is bridge insurance different from traditional insurance?
A3. Bridge insurance is designed specifically for blockchain-based transactions, providing coverage for risks and threats that are unique to DeFi. Traditional insurance is not equipped to handle these types of transactions.

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