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Although the value of stablecoins such as Tether (USDT) and USD Coin (USDC) is designed to be pegged to another asset (such as the U.S. dollar), the crypto industry has been worrying about the possibility of major decoupling for many years-especially U.S. regulatory issues Regarding Tether, its current market value exceeds $63 billion.
Now, a company intends to provide investors with discretionary insurance against this situation-and Tether itself is supporting this approach.
Bridge Mutual aims to reduce the risk of capital loss due to smart contracts being hacked or exploited, exchange hacking or theft, stable currency prices plummeting, and other digital asset vulnerabilities.
Stablecoin Insurance is not complicated in principle. If the stablecoin falls below its peg within a period of time, the policyholder can file a claim. The oracle checks the current price of the stablecoin and then pays the investor the overall difference between the current price and the peg-but uses a different stablecoin.
related: How stablecoins remain stable, explain.
Paolo Ardoino, Chief Technology Officer of Tether, said: “Smart contract vulnerabilities have become a huge risk in decentralized finance. They are the main reason for the loss of millions of dollars in consumer funds. With the launch of Bridge Mutual, we hope to prevent future Hacking and building more trust in DeFi products.”
As Bridge Mutual switched to a decentralized governance model, Tether quickly expressed financial support. The stablecoin issuer has set aside US$500,000 for token acquisitions-the same is true for Bitfinex, which is a cryptocurrency exchange closely related to Tether Limited through its ownership. These tokens should ensure that both companies participate in the governance of Bridge Mutual.
Mike Miglio, the founder of Bridge Mutual, explained: “Tether and Bitfinex have shown great support for the project by connecting us with many other respected projects that are now our partners, and they are also committed to To help us promote Bridge Mutual, improve the design, and integrate it into other platforms and systems.”
According to Miglio, policyholders deposit their Tether in the pool as collateral. In exchange, they can also share the platform’s profits and earn revenue.
“Billions of dollars of trading volume enters and exits stablecoins every day, and people and institutions secretly believe that the value of stablecoins will remain stable,” Miglio continued. “If the coverage of stablecoins is easily available and easy to use, then everyone will be able to increase their exposure to the cryptocurrency market, not because of whether all the value they store in stablecoins will fall overnight Zero and insomnia.”
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