DeFi full stack insurance? See how UNION bridges the gap between DeFi and CeFi

Time:2021-12-23 Source: 1265 views DeFi Copy share

Simply put, UNION is the protection building block in the DeFi LEGO stack.

At 8pm on January 12th, Michael Beck, the project leader of UNION's main creative team, and John Liu, chief product officer, were a guest at the Deep Chain Finance Online Salon, focusing on the theme of "DeFi full-stack insurance? See how UNION bridges the gap between DeFi and CeFi" To share.

Michael Beck, the project leader of UNION's main creative team, has more than 25 years of experience in healthcare and finance.

John Liu, Chief Product Officer of UNION, has been engaged in the trading of financial alternatives and derivatives on Wall Street for 9 years, and has 11 years of product innovation in cross-industry operations and transactions.

Could you please tell us briefly what kind of DeFi insurance project UNION is?

John:To put simply, UNION is the DeFi protection building block in the DeFi Lego stack. 

Our decentralized technology platform combines bundled or “full stack” protection, a liquid secondary protection market, and a multi-token model to lower the risk of DeFi participants, without needing membership or KYC.

New DeFi needs new ways of protection. That is UNION.

Michael:UNION is a project focused at making defi easier, less risky, and cheaper. We do this by offering tools and apis that enable users to address collateral optimization, gas volatility, and smart contract risk concerns.Our insurance is composable to address the need for flexibility over defi's many risks and challenges.

With the rapid development of DeFi, money lego like lending, insurance have become more and more flexible, and hacker exploit incidents have also occurred from time to time. So can you give you a brief introduction to how UNION creates a safer ecological environment for DeFi?

Michael:The key here is our separation of governance from liquidity and policy from benefits.This is done using a 3 token system, where we have a UNN token, a uUNN token, and a pUNN token.The UNN token is strictly governance.The uUNN token is the policy token.The pUNN token represents the liquidity participation of parties who fund benefits for parties who purchase insurance coverage.

John:In TradFI or CeFi, a person can take out insurance on the centralized organization holding their assets.In DeFi, there is no central organization.So how does one protect themselves? Not to mention, cryptos is still a very new concept to majority of retail, so traditional insurance can't measure the risk.Union creates a framework where DeFi risk takers can earn yield and offer protection against DeFi risks, like smart contract hacks.UNION extends the protection into other areas too.These include, for example, the high cost of capital in lending protocols, the high cost of transactions, and impermanent loss.UNION helps DeFi users protect themselves and, true to blockchain, distributes earning opportunities to everyone instead of single organization.

Michael:We fund individual risks separately, and combine benefits and determination of adjudication in the uUNN token.

Could you please tell us how UNION supports cross-DeFi protocols?

John:Cross-chain is very dear to me, given my background with Fusion.Thankfully, there are various protocols working on cross-chain, and the well-known ones are Dot, Polkadot.We intend to utilize the excellent avenues provided by these protocols to bridge the cross-chain issue. Our recent partnership with Waves, who have a cross-chain protocol Gravity, is an example of our approach. We've been in talk with some cross-chain protocols where, even though mathematically, their cross-chain technology is secure against hacks (for example, through MPC --multi party computation) , they still want to offer users and additional layer of comfort in the form of insurance.Talks are still early, but we see much opportunity in this space.

There have existed some popular DeFi insurance projects on the market. What is special about UNION compared to other projects, and why UNION can outperform?

Michael:Union is different because of our treatment of governance and support liquidity.We have been talking about the need to separate these things for a while, and it seems like other projects are just beginning to listen.We similarly don’t require kyc for participation in the trade and use of the token—we arent a mutual or other ownership organization where only the members can participate.Finally, we allow for composable benefits within our policy tokens.

From your perspective, what are the pain points in the DeFi insurance market? and how will it develop in future?

Michael:Defi will continue to innovate, but I think risks from hacks and unintended consequences of composibile defi contracts will continue to add risk and expense to adoption.For this reason, I think protection products like ours, which help to control expense and risk, will be more and more important.

John:We are seeing the pain points now in DeFi. 1) New vectors of attack as sophisticated hackers go after large pools of money in a rapidly evolving landscape. 2) The cost of DeFi--ETH gas will continue to be an issue, even with layer 2 solutions kicking in. The good news is, much like how the industry has addresesed "usability" in DeFi in 2020, we know the industry, and UNION, is up to the challenge to solve these issues.

We all know UNION has been launched on BitMax, so how does the project progress now? and what are the future plans?

Michael:We are very focused on token liquidity and project progress—we are still building our core frameworks and are testing our work extensively, using approaches we've adopted through earlier challenges with the project.We are better for having challenges, which made us question core assumptions about our software development and quality assurance, especially when we see a number of project failures and issues in this space. Our project launch and improving the size of our community and username are the highest priority.

John:For 2020, we were focused heavily on regulatory compliance. Looking at the actions of not just SEC, for example, going against XRP but even in Europe, we see regulatory oversight increasing as a given. We believe regulatory compliance will be an important moat going forward.Now we are rapidly building out the product and shared yesterday an update in our medium channels insight into our first product on collateral optimization. This product utilizes decentralized options to reduce the amount of collateral needed to post for lending protocols. I’m very excited not just because we are building protection, but because we are building two important primitives for DeFi: 1) decentralized options and 2) a lending protocol that uses derivatives

On the topic of Bitmax by the way, we also have exciting collaborations where users of Bitmax will be offered a way to participate in providing liquidity for our protection pools and earning very nice yield. More to come in the future.

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