Staking Insurance

As more blockchain networks come to rely on Proof of Stake, delegation of tokens to validators running nodes is growing. While staking promises rewards (paid in kind), it also comes with risk. If your validator gets slashed for malicious or delinquent behavior, you’ll get slashed and lose your tokens too. Currently, delegators must trust their validators will be reliable. A far better solution would be to insure the risk. This is a very new area; to my knowledge no one is insuring this risk yet. Etherisc could capture this market were it to move quickly.

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There has been no response to this post. Is the Etherisc community in hibernation?

If this was available I’d stake a much larger % of my portfolio

Etherisc (hello, anybody home?) will not be the first to this party: “Through this collaboration, Tidal Finance will adequately insure the vETH smart contract created by Bifrost. The Bifrost team will also be covered by Tidal for validator slashing losses down the road and integrate future developments into Bifrost general vToken and its yield optimization features.” See “Tidal Finance partners with Bifrost to provide Asset Insurance and increase Platform Security” published today, March 26.

Hi @JNald, sorry for the late reply. Yes indeed, this is a new kind of risk which could be insured in principle. For me, the question is: what is the actual risk? I mean, e.g. ETH 2.0 staking is a pretty deterministic process. If you understand whats going on, and you are able to configure you machines properly, there is no systemic risk.
There is however operational risk. E.g. your rack could burst into flames. Your devops guy could get sick or run away. In all of these cases, there is a risk that your operations would be interrupted, causing a financial loss in staking as a result.
But then, the risk is not a staking risk but a business interruption risk.
Of course this is an interesting area, we will certainly watch this space.

Yes, the greatest risk is likely operational. However, most validators will guard against it as they too stand to lose money if their “rack bursts into flame.” Additional risk arises from the possibility, however slight, that a validator will engage in malicious behavior. With most blockchains moving towards consensus based on proof of stake, this is a HUGE market and one with HUGE upside for Etherisc. I have carefully reviewed the Tidal Finance project since mentioning it at the start of this thread. While TIDAL claims to be working on staking insurance, in reality its project is mostly hype and little substance. So a good opportunity for Etherisc.

I don’t know how staking works, so when I hear that Dip tokens will be staked eventually, I’m always sitting around wondering how I’d even get the Dip from my ledger device to wherever it would be to stake them and what the involved risks might be. Whenever DIP gets there, hopefully someone can make a Youtube video or something explaining the process.

I have nothing to add about Dip being used as Crypto Staking insurance. If the risk is calculated at runtime, it seems like you’d have partnerships with other apps / exchanges set up in advance for it to even work, unless there’s an easy way to digitize the process that I’m missing, which might be the case because I’m pretty new to staking.

I completely 100% agree with the post that said that if they could ensure that they wouldn’t lose crypto to staking, they would stake more of their portfolio. I would as well.

And I would imagine that with crypto there would be some kind of specified format for their info. Like isn’t it all smart contracts, so maybe if the contract fails it pays out automatically?

I’m probably just way off in my understanding of the technology, but this company is exciting because it’s seeking out a way to automate the entire insurance process - so any type of growth that really requires a lot of human labor is probably a misstep.

Crypto Staking insurance is exciting in that people would earn a small amount of crypto (Dip) by insuring their crypto staking against loss. So like it’s the right incentive to really sell people for crypto insurance. But if you can’t automate the process, you’ll be going exchange to exchange and figuring out how to offer the Crypto Staking Insurance and that’s a resource-heavy time suck.

LMAO I probably should get more DIP if I’m contributing on the forums