155 Terra Victims To Get $12 Million In Compensation From InsurAnce.
According to DeFi insurance firm InsurAnce blog post, it is spending $12 million to compensate 155 investors who lost money during the Terra crash.
There’s light at the of the tunnel for some of the investors who lost their investments when Terra ecosystem crashed. The crash was triggered when Terra’s UST stablecoin de-pegged from the USD and plunged way below the 1:1 ratio. As a result, Terra Luna, now Luna Classic, took a hit, sending it down from the highs of over $100 to near zero.
An insurance firm operating in the DeFi space, named InsurAnce, took up the mantle to make whole UST investors who had taken up insurance policies with it. InsurAnce debuted in the crypto market in April 2021 to provide risk protection services to the DeFi industry. This way, DeFi users can insure their investments against unforeseen risks like stablecoin de-pegs and bankruptcy.
InsurAnce Was Heavily Hit By The Claims
Granted, only a few entities relating to Luna and UST came out unscathed after the terrible crash of May 2022. Due to the mounting insurance claims, InsurAnce incurred around $11.7M in costs. The firm had only collected around $94,000 in insurance premiums from UST investors. The firm has an in-house token named INSUR that is used by investors and stakers (underwriters) to vote on various issues pertaining to the insurance entity. These voters verified claims, where 155 claims were found eligible for compensation, while 18 were rejected.
The firm’s CMO, Dan Thomson, said,
“The decentralized voting was conducted by InsurAce’s community of Claims Assessors who hold and stake INSUR Tokens. And at the conclusion of the Voting process, they approved a total of 155 UST de-peg Cover claims and 18 rejected as not ineligible in line with the Stablecoin de-peg Cover terms and conditions.”
Stakers And Investors To Be Compensated
Since the funds used to settle insurance claims belonged to stakers and investors in the InsurAnce ecosystem, the firm has set up a plan to compensate them.
The CMO said,
“In addition to improving our risk management strategies, we have put some plans in place to mitigate the losses incurred by stakers. Over the next 12 months, A fixed sum will be paid into an on-chain pool from which stakers can withdraw their compensation. The staggered approach will help us ensure that we can help stakers to earn back some of their losses, whilst maintaining healthy liquidity in the InsurAce protocol.”
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