The volume of transactions that take place in the DeFi space is massive and is continuing to grow exponentially, as measured by the overall value of cryptocurrency assets deposited in DeFi protocols (i.e., “total value locked” or “TVL”). Given the growth experienced by the DeFi market, it is not surprising that DeFi users have sought to take advantage of risk allocation devices similar to those used in other markets and industries. One such risk allocation device is insurance. Given the fact that DeFi is—by its nature—decentralized and its users are accustomed to decentralized financial products, it makes sense that insurance solutions provided to DeFi users would likewise have decentralized characteristics. Indeed, we have seen a number of providers established recently in the emerging decentralized insurance space for the purpose of offering decentralized insurance solutions. However, insurance coverage of events that affect the DeFi ecosystem (e.g., cybersecurity coverage for DeFi exchanges) need not be decentralized—which provides ample opportunity for existing providers of such insurance coverage to expand their current offerings into the DeFi market.
That's why Prime Chain aims to create a decentralized Insurance for Prime users, protect their long-term benefits and make them feel secure when they decided to step a foot in our project
It is important to dive deeper into our work. One of the foremost aspects of “How does decentralized insurance work?” rests on decentralization. The basic objective of insurance in DeFi is more or less the same as insurance in the scope of traditional finance.
Generally, a multinational insurer issues and underwrites a traditional insurance policy. However, with Prime Chain, rather than purchasing insurance coverage from one specific individual or company, you can purchase coverage from a Prime-Defi pool of insurance providers.
More than that, any individual, user, developer can work as an insurance provider by locking up capital in the Prime decentralized pool. The individual providing capital to the pool can qualify as a liquidity provider.
The liquidity providers also referred to as underwriters, serve as the main agents in DeFi insurance protocols. They provide capital in the pools in return for a share of the premiums. The next important actors in the working of insurance in DeFi include the governance token holders and claims assessors - Which will be PMC. They take on the responsibility for voting on claims and modifications to the protocol. Another important component of decentralized finance insurance is the claimants, who purchase the insurance premiums.
As you can notice, every player and user has a distinct role in the overall scheme of Prime-Defi insurance. Staking in Prime insurance projects, according to the underlying protocol, can serve as a promising pursuit for accessing a regular income stream from insurance premiums. On top of it, the rewards of native governance tokens - PMC also make insurance in Prime Chain more lucrative. Coverage providers can choose the length of time of the insurance of the light the can be an insurance premium. Of course the more commitment they make the more money will come