Coindesk and other news outlets have reported that insurance cooperative Nexus Mutual and wallet provider Argent plan to offer a combination of smart contracts and insurance to keep Argent users’ funds safe from hackers.
The aim is to help bring bank account-like protection to users of the ethereum blockchain.
The new ‘wallet’ differs from the usual crypto transaction because a user has 24 hours to cancel a frozen transfer, much in the way a bank might step in and prevent card fraud or similar suspicious activities on an account. In most cases with crypto transactions, once the transfer has been made, the funds have gone for good.
Nexus and Argent plan to protect users from any failure in the smart contract. They are creating a fund to insure users against losses. To participate, users would have to stake Nexus’ NXM tokens, for which they would receive rewards. This is similar to what happens when policyholders of a mutual insurance company receive dividends on their capital. And when claims are made they are paid from staked tokens. Nexus founder Hugh Karp said, “In general, what we are trying to do is provide cover to the crypto community when it can’t access it via the normal means.”
The insurance may not be at the same level provided by national bodies that protect bank users deposits, but “Nexus is leveraging traditional ideas of customer-centric and community-focused mutualism which has all but vanished from the profit-driven world of insurance today — and doing it using cutting-edge technology,” Coindesk reports.
The product is already live and Argent co-founder Itamar Lesuisse said, “We are thinking about not just crypto users but also new users — and so the end goal is to repeat what they get from their bank.” He also said he the company was proud to be promoting belt-and-braces protection for users of the wallet, and that Argent “would also be first in line to eat his own dog food and stake NXM against the wallet’s own smart contracts.”
Karp is also looking to the future and to developing a product to cover is the assets locked up in DeFi (short for decentralized finance) smart contracts. He said, “Maker and Compound and Uniswap and all of those that are coming are starting to accumulate assets at a rapid click. Obviously, these are fairly hardened contracts but more and more are coming and there is still a non-zero risk that they could have a bug.”