How an On-Chain Claim Verification Tool Could Make DeFi Insurance Fair and Hassle-Free
The world of decentralized finance attracts a lot of attention from hopefuls and risk-takers. Despite its promising future, the ecosystem cannot resolve disputes transparently. Your funds are probably gone forever if you accidentally sent them to the wrong wallet address. Therefore, dispute resolution and legal protection will prove essential to making DeFi appealing to institutional players.
DeFi is too risky in its current form
To most people, decentralized finance is an industry segment that lets one gain wealth passively. With the right crypto assets, one can lend, borrow, staking, farm yield, earn NFTs, and a list of other opportunities. It all sounds great on paper, but the reality can be very different.
Regardless of how one wants to spin the narrative, decentralized finance is a risky industry.
Not only are users dealing with volatile assets, but the protocols and services are a risk factor as well. For example, a poorly coded smart contract could result in a hack and funds being stolen. More often than not, users will not see their money returned to them when such an incident happens.
In an industry where everything is decentralized, there is still plenty of manual intervention. Developers need to keep adding features and services, either through community voting or their own decisions.
But there is always a “human factor” in the equation that will create inherent risk. If something were to go awry, there is often no recourse at all, not even through developers intervening.
With those flaws and issues in place, a new solution needs to be found. On-chain dispute resolution is one option worth looking into. It is a compelling concept that benefits not only regular users but also institutional clients. More specifically, with resolution and legal protection in place, broader blockchain adoption becomes a possibility.
Finding the right assurance provider
The concept of on-chain dispute resolution and legal protection is not entirely new. Similar debates have flared up since DeFi began gaining traction.
Insurance providers and anti-rug pull solutions are the first steps in the right direction. However, they are a far cry from assurance and a legal layer. Cutting out fraud and doubt from this industry will pose many challenges, yet nothing is impossible.
Astra protocol boldly forges ahead where others are at a standstill. The project provides a legal layer that plugs into any existing platform on public blockchains.
Its benefits range from ensuring funds arrive safely at the correct wallet address to resolving issues and restoring funds in case of a mishap. All of this is made possible by adding a dispute clause. When both parties agree to use Astra, the dispute clause is added to the smart contract.
Astra uses a combination of human expertise and technology to resolve all issues. That includes human error, fraudulent transactions and accidental payments, should they occur.
The end result is complete legal protection for all parties and transactions. It is a cost-effective and efficient way to resolve any issues that may arise, and add an extra layer of peace of mind to any interaction.
Astra protocol’s patented legal layer can make decentralized finance a much safer and appealing industry. Moreover, the project has partners in KPMG, IBM, and Latham & Watkins LLP.
Bringing a layer of assurance to decentralized finance is a daunting task. With so many projects, protocols, services, and yield farms, tremendous amounts of money flow freely.
Unfortunately, there are also numerous exit scams, rug pulls, and coding issues to contend with. Anyone can see that DeFi needs insurance and other forms of legal protection to remain relevant.
More importantly, introducing this extra layer of security will help attract institutions to the blockchain space. With a growing advisory board that recently welcomed former European Commissioner for Trade Phil Hogan, Astra protocol is on the right track to trigger a paradigm shift. Efforts like these will push the industry forward and help unlock additional liquidity flows.