What is RiskShield
Product concept and positioning.
RiskShield is a globally decentralized protocol that allows users to purchase mutual protection for their digital assets against losses from hacking, smart contract bugs, stable-coin de-peg, or other forms of digital asset related risks.
Risk is currently shared in two mutual pools under the RiskShield protocol (cover payment pool and underwriting mining pool) which are governed by its members where membership rights are represented by the $RSY token. As such, RiskShield may be described as a mutual.
At RiskShield covers are issued by the RiskShield protocol's smart contracts rather than a centralized entity. When purchasing Covers and submitting Claims on the RiskShield platform, the ease and seamless experience of the entire process removes the need for a person, agent, or any intermediary for that matter to facilitate an introduction, propose, or advise on the merits of the Covers to users. The entire cover purchase and claims submission process is completed by the users on their own. Furthermore, the claim administration and assessment process is decentralized and governed by community voting and expert investigations.
Unique Selling Proposition
The RiskShield protocol was built to meet strong market demand for multi-chain covers and fill in the gap for portfolio-based protection. The RiskShield protocol's four unique propositions are: "0" Cover Payment, Enriched Product Line and Sustainable Return.
"0" Cover Payment
RiskShield reduce prices by designing risk diversification into the RiskShield protocol's portfolio-centric products. Other protocol features include unique pricing models optimizing cover cost, access to domain expertise, and investments which help to offset cover cost which enables the RiskShield protocol to offer its products at low prices.
Enriched Product Line
Unlike the single protocol-based coverage of other cover providers, RiskShield offers a unique portfolio-based approach which can cover a basket of DeFi protocols, creating a diversified risk management tool for DeFi investors.
Despite the fact that Ethereum is the dominant blockchain for DeFi protocols, successful DeFi projects have also launched on other blockchains. RiskShield has expanded its services to cover protocols outside of Ethereum so that users can continue to invest freely and safely.
Anyone with a digital wallet has permissionless access to the RiskShield protocol to utilize its services such as buying covers, staking assets, making claims, and more.
Sustainable Returns
Low investment returns have been a significant problem for cover providers such as Nexus Mutual since its investment returns to capital providers comes from cover payments, which have relatively low yield compared to lending and borrowing platforms such as Aave and Compound. Such low returns discourages liquidity provision from capital providers, thereby exacerbating other issues such as high prices and limited cover capacity.
Through RiskShield, underwriters will be able to enjoy investment returns from multiple avenues, including:
Directly investing in investment products of various risk levels.
Staking in the RiskShield protocol's mining pool to earn investment yields and $RSY token rewards.
Earning returns generated by cover payments.
RiskShield believes that a multi-faceted approach to investment returns and capital management is the more sustainable way to benefit both underwriters and cover purchasers alike.
Continuous Evolution
At its very core, RiskShield purpose is to provide a critical and much-needed service to DeFi users in a fast growing financial market. Hence in addition to the above, the RiskShield protocol will provide and continue to improve on the following:
Handling and quantifying claims fairly, instead of simply accepting or rejecting claims.
Providing extensions, increments, or transferring capabilities to existing covers.
Collaborating with other DeFi protocols to form a network of cross protections, cover syndication, and more.
Expanding and improving the RiskShieldprotocol's product line to better cover risks present in DeFi.
Establishing a governance structure for robust product development, efficient claim assessments, effective community engagement, token distribution, and more.
Business Model
RiskShield provides two interoperable and functional arms: the Cover Arm and the Investment Arm.
The Cover Arm manages a capital pool which helps maintain the RiskShield protocol's solvency and therefore ability to meet its cover obligations. The Investment arm manages investment pools which generates returns in order to finance possible claim payouts and attract investment capital. Free capital in the Cover capital pool may be transferred to the Investment pool to earn higher yields and subsidize users' costs from cover payments. At the same time, the Cover Arm protects the Investment Arm.
Revenue generated from cover payments and investment returns will also contribute to the RiskShield protocol's operational and development costs, token buybacks, community incentives, ecosystem collaborations, and more.
Summary
What makes RiskShield an effective cover provider is the sum of its parts outlined above, namely the products designed to meet market demand, adequate capital provision, effective governance, investment of free capital, a robust and efficient claims assessment process, and dynamic pricing models.
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