Over the last three years, the Decentralized Finance Sector (DeFi) has grown considerably. Today, the total value locked has increased from $800 million in 2018 to over $140 billion. This makes it one of the fastest-growing tech-based markets out there, which hosts over 240 projects and has received a tremendous amount of interest from crypto enthusiasts and investors worldwide.
The Pros and Cons of Investing in DeFi projects in 2021
DeFi applications are financial applications built on blockchain technology to democratize the global economic system by providing services that replace current centralized institutions. This vision of achieving global financial decentralization through various avenues has allowed the market to experience rapid growth over the last few years and has undoubtedly created significant opportunities and wealth for many over this time. However, with such growth comes many risks, including that of hackers and fraudsters who seek to take advantage of such new markets.
According to a report from Reuters, DeFi fraud in 2021 was at a record high where bad actors made around $240 million in only the first four months of the year, by carrying out hacks and fraudulent activities on projects within this Industry. $240 million may sound like a lot, but these are only the cases that are known publicly and do not account for the real losses that are thought to be in the billions.
Moreover, it has been found that the majority of these hacks are down to a handful of reasons that include: developer incompetence, coding mistakes, misuse of third-party protocols, business logic errors, miner attacks, and the use of flash loans to manipulate asset prices. Once one or more of these vulnerabilities can be exploited, they leave room for hackers and fraudsters to run amuck for such projects and their investors, resulting in millions to billions of dollars of losses and a drop in market confidence.
Combating Negative Exploits
The growing number of negative exploits and security compromises have led to more concerns about the safety of decentralized finance (DeFi) technology in general. On the other hand, they have pushed forward the development of projects geared towards protecting DeFi systems to ensure that negative exploits are minimized in the future and investor confidence is maintained.
One project that has set out to achieve this is Shield Finance, the scanner of blockchain and DeFi insurance, whose sole aim is to provide the Industry with the much-needed protection it requires.
Shield Finance is all about protecting investor interests within the DeFi and crypto space through streamlining a Multi-Chain DeFi Insurance Aggregator that allows users to “insure” their investments and buy protection against major market crashes due to events like hacks, exploits, rug pulls, sell-offs. This is achieved through the development of the Shield proprietary aggregation engine that connects traders and investors with custom 3rd party crypto-insurance packages allowing them to shop the market to find the best rate. Once a provider is found through the Shield DApp, users can pay a premium for coverage and receive compensation if an unforeseen negative event occurs.
The system has been designed to be as easy to use as possible. Users can access an insurance package of their choice through the Shield Finance DApp, set out their protection parameters and coverage amount, and then navigate through a whole selection of available insurance providers and liquidity pools tailored to their needs. They can then select a relevant package and pay the premium required to gain protection immediately.
Creating A Safer DeFi Ecosystem
By following current trends, the DeFi market could potentially grow 10-fold in 2022 amounting to assets totaling over $800 billion by the end of next year. With this in mind, it goes without saying that there is much to gain from investing in this space, but one must tread carefully.
At Master Ventures, our mission is simple, to provide value to everyone in the crypto space by mitigating risk for traders and investors. This is why there must be more mechanisms in place within the blockchain and DeFi markets that concentrate on protecting the wealth of their investors and the ecosystem as a whole.
The great thing is that these exact technologies are also being explored to provide these exact solutions. Shield Finance is one of these projects that it’s leveraging the power of blockchain to deliver much-needed value and protection to the market. It is only through achieving this and creating a safer investor environment that we can ensure long-term sustainability, confidence, and continued growth. We are working closely with the team as part of our FUEL incubation program to do our very best to ensure that it becomes a reality.
About Shield Finance
Shield Finance is a Multi-Chain DeFi Insurance Aggregator that allows users to buy protection against major market crashes due to black swan events (hacks, exploits, rug pulls, sell-offs). Incubated by Master Ventures (MV Fuel), Shield utilizes a proprietary aggregation engine to provide custom insurance packages for investor needs.
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About Master Ventures
Master Ventures is a blockchain-focused venture studio, helping to build the next generation of blockchain-based Web 3.0 system innovations within the crypto industry. Launched in 2018 by Founder and CEO Kyle Chassé, the company’s ethos can best be summarized in the acronym #BeBOLD: Benevolent, Open, Love, Decentralized.
Master Ventures co-creates with entrepreneurs and businesses worldwide to turn the best ideas into innovative and disruptive products and solutions. They do this by investing as strategic partners through offering advisory services to the projects they believe in. To date, Master Ventures has invested in over 40 crypto projects including the likes of Kraken, Coinbase, Bitfinex, Reef, DAO Maker, Mantra DAO, Thorchain, and Elrond.
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