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Disclaimer: Nothing on this website should be taken as professional legal, financial, or insurance advice or as a suggestion to buy or not buy the items mentioned. Only general information and educational objectives are meant for this page. Regarding the information on this page, no warranty of any kind, either express or implicit, is provided. If there are any technical, editorial, typographical, or other mistakes or omissions on this page, or if any harm, damage, losses, or claims are made as a result of your use of this information, BEE AI LABS disclaim all responsibility to readers. To make sure the information on this page is not significantly out of date, always check the date of the most recent modification.
Despite the fact that BEE AI LABS do not directly provide insurance to its customers, there are a variety of products out there that provide coverage for our protocol, smart contracts, and users' portfolios. This page provides an overview of the main DeFi insurance product categories currently offered, some of the dangers related to them, and the various BEE AI LABS plans that are currently available (including from our official partners and unaffiliated products).
Since DeFi is inherently dangerous due to the rate of change and technological advancement, the concept of insurance may initially seem counterintuitive. By spreading risk and expense among thousands of willing participants, insurance really represents one of the oldest examples of decentralized financial products. This is done to ensure that neither is concentrated at the individual level.
At BEE AI LABS, we understand that insurance is a crucial element of a sound, contemporary financial system since it protects against significant harm and disruption caused by improbable or unforeseeable, but ultimately inevitable risks and catastrophes. With protection against potential hazards, insurance enables consumers to access the DeFi ecosystem and work with this technology in a safer and more controlled manner. Additionally, it facilitates institutional capital, which could otherwise be excluded from the market due to stricter risk management regulations. As a result, we believe insurance promotes the growth and expansion of DeFi, opening the door for widespread use.
Insurance, however, is a challenging sector of finance. In the end, each and every underwritten policy is distinct and deals with various types and degrees of risk. Therefore, it is crucial that our consumers conduct their own research before purchasing insurance and make sure the options they select are appropriate for them and properly priced. It is always advisable to take the following precautions: (a) read the provider's documentation and policy documents; (b) investigate the provider's financial position and support to make sure it has enough cash on hand to cover a payout; and (c) confirm that the policy's coverage is appropriate for the risks you want to be protected against.
Along with DeFi's growth, a rising number of insurance products are becoming offered, including those from corporate and decentralized sources. Among the essential types are:
- Protocol Coverage - A specific DeFi protocol is covered by protocol coverage for a variety of common risks and problems, including contract defects, economic attacks, and governance attacks..
- Token Coverage - protects against cross-stack risks in the underlying assets and protocols that the covered product is built on for a specific token product (such as an LP or auto-compounding vault).
- Portfolio Coverage - protects a specific wallet, including all relevant assets from insured protocols that the wallet holds, up to a predetermined value of the loss.
- Custody/Custodian Coverage - protects against risks connected to custody wallets and agreements with centralized entities, such as blocked withdrawals, custodian hacks, and haircuts resulting from poor administration.
- De-peg Coverage - protects against risks in a specific token product that occur from the asset's value de-pegging (i.e. failing to hold market value in line with the underlying assets that it is supposed to reflect).
- Staking Coverage - protects against a number of risks associated with validating and staking on blockchain networks, such as missing out on rewards and suffering losses.
- Bundled Product Coverage - combines various protocols, goods, or hazards to produce a single product that satisfies all of the consumers' requirements.
Although BEE AI LABS promotes the advantages of insurance, we also caution our users about the risks associated with the products themselves, which could cause you to lose your investment in the insurance. We particularly advise people to think about:
- Coverage Amount - intend to acquire, which is normally expressed in fiat currencies, must typically be stated up front when purchasing an insurance package. You might be persuaded to get the insurance that covers the present worth of your investment or even more. The coverage amount normally does not guarantee how much you will receive, but it does set a maximum payout value. Furthermore, the appropriateness of your coverage level will be affected if the value of your assets changes. For instance, a significant decline in your portfolio's value will lessen your chances of recouping the entire coverage amount you initially acquired. Make sure to keep a close eye on your coverage levels.
- Coverage Limitations - coverage is often restricted to a closed list of claimable risk occurrences (e.g. smart contract vulnerability covers "malfunction or programming flaw, or unauthorized, malicious, criminal attacks, hacks or exploits of any malfunction or programming flaw"). This could imply that specific predictable events you desire coverage for are excluded from the plan (e.g. a de-peg does not fall within the above definition, so is not covered by smart contract vulnerability cover).
- Captured Products - insurance products don't always aggressively endeavor to highlight the coverage gaps and excluded products. For instance, portfolio coverage might only include products that the protocol can recognize and ignore newer products or blockchains, providing insufficient coverage for your requirements. You probably won't learn that specific products weren't covered by the coverage you bought until your claim is denied because the product is general and the UI is easy to use.
- Pay Out Process - all insurance policies have certain requirements that must be completed in order for a claim to be paid. For example, some protocols need members to vote or decide on a claim before the protocol will pay out, which is a component that is usually outside the control of users and unrelated to the pay out event. When deciding whether a product is good for you, be sure to carefully examine the process, including how frequently the product pays out for claims.
- For instance, insurance protecting the smart contracts or protocol used by BEE AI LABS will probably pay out if our contracts fail, but it won't pay out if the underlying assets on which our contracts are based fail. This occurred during the Terra UST collapse, where our smart contracts continued to function as expected despite the value of the underlying assets falling to zero.
- Providing Coverage - peer-to-peer insurance products are offered by some decentralized insurance companies (like InsureDAO), where users can invest in the protocol by providing coverage in exchange for a portion of the premiums that buyers of the coverage pay. Users are cautioned by BEE AI LABS that these products expose coverage providers to an elevated risk of losing all of their investment in the case of a pay out event under the policy.
- Offering insurance protection is essentially a wager on the security of the protocol or smart contracts that underpin it. Although BEE AI LABS place a high focus on SAFU procedures, we do not advise common people to place a wager on the security of any quickly evolving DeFi technology.
- We know where we'd rather invest our money, and BEE AI LABS can provide you with a similar rate of return on your assets without the pay-out danger.
BEE AI LABS have worked with a number of the top insurance companies in the market to provide solutions that offer coverage over our protocol, products, and contracts in order to deliver the advantages of DeFi insurance to our consumers.
Anyone is welcome to develop on top of our goods and code since BEE AI LABS is completely open source and accessible to everyone. However, this openness can make it difficult for regular users to distinguish between goods that have been developed and evaluated by our team and those that have not. By claiming that their products are "authentic" or "verified," some insurance companies aim to further this misunderstanding by denying any affiliation with BEE AI LABS. The user must ultimately conduct their own research and confirm that the product is what they believe it to be.
The list of known insurance plans that cover BEE AI LABS's products or protocol is provided below; however, these products are not officially offered in association with BEE AI LABS and have not been fully vetted by our teams. Always conduct your own research and use it at your own risk.
The "Providing Coverage" risk from the Risks section above should be taken into account while thinking about these unrelated items, readers are advised.