Academy

Opium Insurance

Decentalized insurance

Decentralized insurance is a product that protects a buyer from a potential financial loss caused by a range of possible events, in other words, it is a tool for hedging risks. Traders buy insurance as a part of their broader strategy in order to secure their profits. Decentralized insurance typically covers a specified period of time and is paid in the event of a loss that may be caused by price volatility, hacking attacks or malicious exploits of projects or protocols, and other on-chain and off-chain financial risks.

Opium insurance:

Opium insurance is tailored for DeFi traders and covers smart contract exploits, credit default events, stablecoin custodian insolvency, impermanent loss, price volatility, SAFT risks, off-chain risks. Opium Insurance is tradable: you can buy it or sell it as the need arises.

1) Stablecoin: USDT Purchase monthly insurance against USDT solvency. If the USDT price drops below 0.95$ by the end of the insurance period, the buyer receives a full payout on a price difference.

2) Smart contract: Bridge protection Purchase monthly insurance against a side-chain bridge hack. If a bridge is hacked by the end of the insurance period, the buyer receives a payout according to the % of the lost funds.

Example:

You wish to minimize risks like the insolvency of USDT (Tether) because your income directly depends on the trust that USDT tokens will be worth one dollar each. However, there were cases when USDT went under one dollar.

You select the amount you want to cover with the protection and receive a price quote, for example, a cost to protect 10,000 USDT is 26.1 USDC. The price will gradually increase from the starting 3% APY as per the insurance pool utilization, so the first buyers get the best quote. You will also see the insurance expiry day, currently, we offer monthly contracts.

If you agree with the price, you pay a premium to the pool and receive a tokenized insurance position. This position can be traded on secondary markets and can be used to claim a payout in case the USDT price is less than $0.95 at the end of the contract.

Stablecoin: USDT

Decentralized insurance is a product that protects a buyer from a potential financial loss caused by a range of possible events, in other words, it is a tool for hedging risks. Traders buy insurance as a part of their broader strategy in order to secure their profits. Stablecoin USDT protection covers one month and is paid in the event of a loss that is caused by USDT solvency. If the USDT price drops below 0.95$ by the end of the insurance period, the buyer receives a full payout on a price difference.

Smart contract: Bridge protection

Decentralized insurance is a product that protects a buyer from a potential financial loss caused by a range of possible events, in other words, it is a tool for hedging risks. Traders buy insurance as a part of their broader strategy in order to secure their profits. Bridge protection covers one month and is paid in the event of a side-chain bridge hack. If a bridge is hacked by the end of the insurance period, the buyer receives a payout according to the % of the lost funds.