How one crypto insurer came to the rescue when UST depegged
The collapse of LUNA and UST marked a new low point for the crypto industry during the current bear market — but it wasn't all bad news.
In fact, 155 investors managed to survive the collapse unscathed after having the foresight to take out an insurance policy that protected them.
InsurAce offered a policy that would reimburse crypto enthusiasts if UST, an algorithmic stablecoin, lost its peg to the U.S. dollar.
It ended up doing so in spectacular fashion — falling to mere cents days after it first divorced from $1 in a meaningful way.
Overall, the crypto insurance protocol said it ended up paying $12 million to clients, and 98% of claims were approved.
By contrast, InsurAce claims some of its rivals have claimed to honor payouts — or failed to offer policies that would protect investors against a depeg in the first place.
The protocol says the sorry case of UST proves the need for DeFi insurance, which also covers matters including smart contract hacks and custodian risk.
InsurAce says it has been able to win the confidence of crypto investors by having clear policies in place, and acting quickly in response to market movements.
Barely 48 hours after UST depegged, the insurance protocol set the process for claims in motion — and explained cover had officially been triggered because UST had fallen below $0.88. Payouts were finalized just one month later.
Chief marketing officer Dan Thomson said at the time that such incidents were a driving force in the establishment of InsurAce, which has the ambition of ensuring crypto is safer for everyone.
The protocol also has a decentralized feel, with claims being voted on by a community of claims assessors who hold and stake INSUR tokens.
InsurAce told Cointelegraph: "Insurance in crypto
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