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In a blog post by DeFi insurance company InsurAce, it is reported that it will spend almost $ 12 million to pay compensation to 155 investors who lost money as a result of the collapse of Terra.
For depositors, this news was the light at the end of the tunnel. Recall that the collapse in prices for the UST stablecoin occurred after it lost its peg to the US dollar, falling far below the 1:1 ratio. As a result, the Luna token, and now Luna Classic, failed and collapsed from its maximum of more than $ 100 to almost zero.
Insurance company InsurAce took the initiative to compensate UST investors who had issued insurance policies at the firm. InsurAce debuted on the cryptocurrency market in April 2021 to provide risk protection services in the DeFi industry. Thus, DeFi users were able to insure their investments against such unforeseen risks as the loss of their binding by stablecoins or bankruptcy.
Due to the massive onset of insured events, InsurAce incurred costs of about $ 11.7 million, while the firm collected only $ 94,000 in insurance premiums from UST investors. The firm has an internal token called INSUR, which is used by investors and stakers to vote on various issues relating to the insurance organization.
Among the considered applications for the occurrence of an insured event, 155 applications were recognized as falling under the conditions of compensation, 18 were rejected.
Since the funds used to settle insurance claims belonged to the stakers and investors of the InsurAce ecosystem, the firm developed a plan to compensate them.
Over the next 12 months, we will pay a fixed amount, contributing it to the on-chain pool, from which participants will be able to withdraw the compensation received.
Such a stepwise approach will help ensure our ability to help stakers compensate for some of the losses, while maintaining healthy liquidity in the InsurAce protocol, the insurance company explained.
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