The decentralized stock exchange, Opyn, has launched an insurance offering for savers who have put their money into the various DeFi platforms. The insurance consists of putting an option on your values that are locked with the savings provider. Should a hacker or an other unforeseen incident occur, you will be assured that your location is “hedged” somewhere else.
Opyn opened its doors in June 2019. Then they launched a decentralized exchange where users could trade on margin. It is not common to offer mortgages on decentralized exchanges, as the main point of such platforms is that you do not store your crypto at the exchange, but tie up your own wallets so that the risk of hacking is significantly reduced. They call this “non-custodial” trading platforms.
Insurance through options
According to a press release from Opyn, they have now launched an insurance offer for anyone using the Compound savings platform. So, customers can secure their deposits against hacking and technical errors that compromise your values.
Technically, this hedging is done by Opyn giving the customer a put option linked to their deposit. It is not a mere put option, but an option structure that exchanges another token against the deposits. The result is that you get back almost 95% of the values you had on the platform before they were stolen or hacked.
An interesting dynamic can arise around this new product, because you do not have to own deposits to buy the insurance. This means that by purchasing the insurance you can benefit from, for example, Compound being hacked, because you did not lose the deposit but were paid the insurance.