DeXe Insurance: No alarms and no surprises?
Nobody likes losing money. And yet, most investments with the kinds of returns people crave have risks that include losing all of your deposit. How can the fear of loss and the greed for gain be reconciled?
Normally, platforms only compensate in cases of critical bugs or hacks. But compensate for trading losses? Unheard of. Until now, until DeXe Insurance.
There is already indirect insurance baked into DeXe Investment in the transparent, real-time record of every trader. And even more so in the requirement for every trader to put up his/her own money in order to take investor funds. The more money you put up, the more investor funds you can trade with. Tends to force traders to think extra hard about the safety of their trades.
On top of that, there is actual insurance done by the investors themselves. Anyone can temporarily stake up to 10% of their deposit in DEXE into the Insurance pool and get up to 100% of their deposit refunded in case of trading loss. Does that mean that every loss will get refunded? Not necessarily. For one, that would lead to reckless trading and quickly deplete the pool. Since DeXe is a DAO, the holders of DEXE will decide in what cases and how much gets refunded (not deciding each individual case for each individual trader but setting and updating rules and parameters).
DAO members have a strong incentive to create and maintain a well-functioning insurance system. If it’s too liberal, the funds will run out and DEXE holders won’t receive any more trading fees. If it’s too conservative, the insurance may become impractical and thus ineffective, depriving DeXe Investment of a powerful tool to bring in and keep traders and investors.
After all, the ability to have your money refunded in certain cases of especially unexpected turns of the market is lucrative. But insurance is called insurance for a reason, it is to be used in certain cases and very judiciously. And the DAO community will figure out — via voting and open discussion — when exactly it should kick in.
About DeXe
Dexe.network is an ecosystem of tools that bring professional trading to DeFi and DeFi to trading with free tools like Wallet Info and Wallet-to-WalletCopying, services such as 111PG and the Kattana Terminal, and more components that complement each other and solve pressing market needs. At the core is a decentralized social trading platform that operates via autonomous smart contracts and includes tools for virtual currency allocation and automatic rebalancing. It eliminates the risks of transferring digital wallet details such as private keys and API or any virtual currency data to a third party. Most importantly, the DeXe Network connects successful traders and followers in a transparent, verifiable way for the benefit of both groups.
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