Yearn Finance Announces Tokenized Insurance, Pushing YFI One Step Closer to BTC

Popular DeFi project Yearn.Finance is ready to take it a notch above with its new insurance primitive called “yinsure.finance.”

To be released over the next few weeks, Yearn Finance is ready to tackle tokenized insurance. It states;

“The design of this system allows any asset that has a financial primitive to be insured, be it a base asset such as DAI, or a composite asset such as aDAI or yDAI.”

The first insurer vault selected is USDC stablecoin wrapped by yCRV (insured vault).

In its official announcement, the team shared the decentralized mechanism of this new kind of insurance, which consists of three components: Insurer Vaults, Insured Vaults, and Claim Governance.

Insurer Vaults are the liquidity providers (LPs) that will provide insurance (USDC) and earn weekly initiation fees paid by insurees but will be responsible for claim management. And the tokenized asset being insured will be held in Insured Vaults.

Claim Governance allows the insurance to create a claim by staking their insured tokenized asset. Insurer LPs will be voting with their asset following standard voting rules, and if the claim is approved, the asset will be distributed to the LPs, and USDC will be paid out to the insured.

The community is excited about this latest development. It expects it to push the price of YFI higher, which is currently trading at $7,150 already approaching its all-time high made today only, as per CoinGecko.

“Yearn making power plays left, right, and centre. This brings us another step closer towards 1 $yfi = 1 $btc prophecy. it is inevitable,” wrote one trader.

However, venturing into the insurance field might put Yearn Finance into the path of regulators.

Selling insurance in the US requires licensure, regulatory approval, paid in capital etc, so if this actually allows you to create & sell insurance products in the US (which seems to arguably be the case) whelp, law and all of that. (I can’t speak to other jurisdictions). https://t.co/oZMqhzMJJS

— Palley (@stephendpalley) August 17, 2020