UST hodlers are in turmoil as the stablecoin has gotten depegged, and there are no signs of recovery. The price is now at 16 cents which is 84% down from the promised rate. And it’s even difficult to swap it for Luna because of the falling price of the token and major exchanges delisting it. So, DeFi Insurance projects are giving payouts to UST hodlers who have valid policies. InsurAce (one such platform) announced that they would be giving $12 million in payouts.
DeFi Insurance projects
The CMO of InsurAce, a DeFi Insurance company, said that crypto is risky, but there are ways to bring the risk factor down, and insurance is one of those ways. The fact that they are paying out millions to UST holders shows that it can be an effective way to mitigate most of the risks of holding stablecoins. So, you guys might be wondering in what case a policyholder can claim their insurance.
The case is different for every company. Most of them have a time period where the average price of the stablecoin must be below a certain price. For example, InsurAce says to claim a policy; the 10-day average price must drop below $0.88. This is great as users who are holding the insurance will not have to face losses.
Some companies are still waiting as their payout terms and conditions aren’t met. Unleashed Finance is one such company, and it says that the 14-day average price of UST shall be less than $0.87 to meet the conditions. Therefore, they have urged users not to sell their coins as the conditions haven’t been met yet.
Be cautious of what you buy
If you are buying insurance that will protect your money in case of a depeg of a stablecoin, then ensure you buy a specific one for that. I am saying this because there are many different types of crypto insurance. While InsurAce offers protection in case a depeg happens, there are ones like Nexus Mutual that offer insurance in case of loss of funds.
With this UST fiasco and DeFi insurance projects giving payouts to hodlers, do you think having insurance is important in the industry? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.