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  • DeFI is an interesting experiment, but

    While the higher APR may seem attractive, it is good to be aware of all the risks around DeFi. It is still in an early stage, as such smart contract bugs, glitches, possible token failures; these are risks that users of lending protocols need to keep in mind of

  • A guide to financial risk in DeFi

    Are investors and proponents properly considering the risk associated with lending stablecoins?DeFi may not be fueled by aggressive speculation and market manipulation in the same way ICO’s were, but the impressive returns offered by DeFi products likely stem from systemic risks that are not always appreciated by investors.

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  • Nexus Mutual – Smart Contract Insurance. Interview with founder.

    Very simply, the members of the mutual, NXM token holders, own all the surplus that is generated from cover purchases. We’ve priced smart contract cover with an expected surplus margin that will eventuate provided claims costs are within reasonable bounds. That surplus will remain in the mutual and is collectively owned by all members of the mutual.

    When the mutual has excess funds, the NXM price increases, and members may redeem their NXM for ETH. When the mutual needs more funds, the price of NXM decreases to encourage funds to be provided. Overall the process dynamically ensures the capitalisation levels of the mutual are both adequate and not excessive.

    Regarding our product, as far as I’m aware we’re the only ones offering Smart Contract Cover, so we don’t have any direct competitors right now. Our goal is to become the best practice standard for projects developing smart contracts. So in a similar way to getting a security audit, we believe projects should also consider buying smart contract cover to protect their early users. This will give their users more confidence in using the new platform, knowing that they’ll be reimbursed if something were to go wrong. It’s a common worry from many users, so we think it will help spur adoption of new platforms.

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  • DeFi Score: Assessing Risk in Permissionless Lending Protocols

    This article introduces a model for assessing risk levels in various permissionless lending protocols. To account for the variety of risks present in these platforms, we use a multi-factor model that looks at smart contract, collateral, and liquidity risks. The model uses a mix of public off-chain and on-chain data to best estimate the relative levels of risk across multiple different permissionless, Ethereum-based lending products.

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