Etherisc, a popular peer-to-peer marketplace, has launched a new insurance product called Depeg Insurance for USDC holders. The insurance is designed to protect USDC holders from the risk of depegging, a phenomenon where a stablecoin loses its peg to the US Dollar. This new insurance product is expected to provide much-needed protection to USDC holders and boost confidence in the stability of the stablecoin market. The launch of Depeg Insurance is another step forward for Etherisc, which is quickly becoming a leading force in the blockchain-based insurance industry.
Etherisc Offers Insurance for USDC Holders Against Depreciation Risk
Etherisc, a decentralized insurance platform, has launched coverage for holders of USD Coin (USDC) in case the stablecoin falls by more than 5% from its pegged value of $1 for more than 24 hours. In such an event, Etherisc will deposit automated payouts into non-custodial wallets. Circle, the issuer of USDC, has revealed that around 80% of USDC is backed by US Treasury bonds while the rest is held in bank deposits. Therefore, Etherisc only covers up to 20% of a wallet’s USDC, as it is regarded as the only capital at risk. Chainlink’s USDC-to-USD price feed has been tapped for the purpose. The protocol will detect when the stablecoin’s price drops below $0.995, and if the price remains lowered for 24 hours, the protocol enters a “depegged state” where USDT payout can be claimed.
How Etherisc Works
Etherisc is a peer-to-peer protocol that allows investors to put their USDT at risk to provide cover for USDC. These investors determine the insurance length and fee, and those seeking protection for their USDC will enter the marketplace where the deal will be finalized. The price of insurance will eventually converge to a specific market price. The objective of this depeg protection is to counter the frequently hazardous nature of cryptocurrency, with the most significant threat being mass stablecoin depegging, which destabilizes the DeFi ecosystem. Etherisc aims to insure large projects such as DAI, which is mostly covered by USDC tokens. Etherisc plans to offer similar insurance products for other stablecoins, starting with USDT with USDC as a mirror of the current product.
It is essential to note that to opt-in for coverage, one must have 2,000 USDC at a minimum to protect. A customer’s payout is computed with the aid of an Ethereum smart contract that takes into account the amount of USDC covered, the customer’s total USDC balance at the time of the depeg event, and the price of USDC 24 hours after the depeg event happened. Etherisc’s insurance is an excellent solution for reducing depegging risks, and stablecoin holders could consider insuring a part of their assets with such solutions. The team at Etherisc is focused on covering large projects like DAI, and its response to a volatile cryptocurrency is a welcome development.