The Problem
Only a handful of Web3 insurance protocols exist and even those face serious risks, which can lead to significant financial losses. Accurate risk assessment and determination of appropriate premiums are essential to the success and sustainability of an insurance policy. Safura is a community-driven insurance concept where members share risk, and the community analyzes claims. This process leverages member experience and feedback to ensure accurate risk assessment and appropriate feedback handling.
Auditors are well placed to evaluate technical risk, creating a direct link between auditing and after-performance compensation. The $SAFU token will play an important role in these coverage pools, acting as a settlement and payment tool.
Coverage Mechanism: The coverage pools will allow projects to lock $SAFU tokens as collateral for insurance coverage. The premium rates and coverage limits will be determined based on the project's audit history and risk profile. In case of an exploit, the coverage pool will compensate the affected project using the locked $SAFU tokens. This system ensures that only thoroughly audited projects receive coverage, minimizing the risk for insurers. Risk Mitigation: We will implement relative and absolute coverage limits to mitigate early-stage risks. This means coverage amounts will be capped based on the project's size and risk assessment. Additionally, the community will evaluate and approve coverage applications, ensuring a democratic and transparent process.
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