Tidal Finance is an insurance DeFi protocol that is designed to keep up with all of the growths and development being made in the space
As of the beginning of last year, the total value locked (TVL) in the DeFi space stood at a paltry $1 billion. Presently, that value is now well over $20 billion which shows that people have immensely invested more.
There is no denying that large quantities of money are being pumped into various protocol initiatives, with the intention of earning worthy gains. However, with all of the lure of gain associated with the space, there is still the fear of how secure these profit-earning protocols are. We have had cases where, due to a security breach, a DeFi protocol loses millions of its users’ funds. This has made the industry risky to operate in since the inception of DeFi. But with this risk, came new opportunities and innovations such as decentralized insurance.
When we think of DeFi insurance, Nexus Mutual stands as the pioneer. While there is no denying that Nexus has done so much for the growth of this sector, there is, however, still a lot of room for the space to achieve more development and growth. This is where Tidal Finance comes in.
Tidal Finance was founded by Chad Liu, who also acts as the CEO of the protocol.
According to him, the DeFi India ustry and Total Value Locked (TVL) was not growing quickly because institutional capital did not have high enough risk tolerance to have large sums poured into projects with the barest insurance.
Hence, the idea behind Tidal was to increase the efficiency of insurance offerings for DeFi.
Liu is a former engineer with Math and has Engineering degrees from top tier universities across the world.
What is Tidal Finance?
Tidal Finance comes in as an option that looks to help simplify everything that concerns DeFi insurance. It is set up in such a way that its users contribute funds that would be insuring Dapps in the field against any form of security breaches or the failure of smart contracts. To understand this in the simplest of terms, Tidal looks to improve the capital efficiency for DeFi investors interested in insurance.
As an innovative insurance solution, Tidal is designed to be able to steadily keep up with whatever growth that happens in the industry. As it stands, only a paltry 3% of the TVL in the DeFi space is insured, so, there is the need for more insurers to protect users of this space.
One way of encouraging increased participation in the DeFi space would be the deployment of notable insurance products that would better protect users against any cyber attack threats or hacking incidents that could lead to the loss of capital in the sector.
TIDAL acts like a Balancer-like insurance market that is built on Polkadot. Its core functionalities are to create a custom insurance pool for one or more assets from multiple chains.
Tidal introduces four key features that distinguishes it from its competitors. They are:
- Insurance Pool
In Tidal, insurance pools can be created through selecting one or more contracts to cover. Here, users have the leverage of being able to select different coins across various platforms. This means that a user could pick Uniswap as a platform and then select ETH as his coin.
This way, the creator of the pool enjoys the leverage of being able to pick assets from different platforms available on the market. At the same time, he also determines the coverage duration, the leverage ratio and a whole lot more are put into consideration.
After a pool is created, a vetting process is immediately carried out to determine the level of insolvency attached to. And once the insolvency level is attained and the risks associated with the product are determined, it becomes available to the market players to interact with.
- Pool stats and ranking
To better help the market players make better choices and also choose pools that best suit their needs, each pool would be ranked while its statistics would be available for the market actors to view.
Pools are mostly ranked based on the following standards:
- Current (and Max) pool capital.
- Current (and Max) return on capital.
- Current (and Max) covered amount.
- Capital/Covered amount (fractional reserve %).
- Estimated payout in next claim.
- Covered contract audition score
- Algorithm control
In order to avoid insolvency, Tidal is designed to provide pool creators with some set of guidelines that can help protect the risks involved with each pool.
To effectively achieve this, the protocol has some controlling algorithms which are initialized at launch. These algorithms would implement these rules:
- Reserve levels of the pool cannot go lesser than a certain percentage which is dependent on the correlation of contracts inside the pool.
- Non-audited coins would be flagged as they would require a higher level of capital reserve.
- Covered duration would also be limited to months, instead of years, especially when the capital reserve is less than the covered amount.
- Any pool offering a higher level of leverage would also have to pay a higher level of issuance fees into the Treasury Wallet. This fee would be used as a form of fail-safe reserve fund.
- Payout Assessment
Tidal community governs the payout system. Claims are assessed by the native token holders who might have staked their tokens during the assessment process.
For a claim to be successful, it has to enjoy the majority of votes, which is at least 70%. Then, the protocol auditor team does the final vetting before a payout is processed. In situations where the process is denied, another round of voting occurs.
The Tidal token (TIDAL) is designed to reward pool creators and the early buyers of the products so that it can increase the adoption rate of the product.
Holders of the token would also be able to accept a certain portion of the fees generated by the TIDAL Protocol. It should be noted that the majority of funds generated by the protocol would be deposited into the Treasury Wallet as an emergency backup fund. This is to avoid situations where a pool runs out of reserves to pay claims.
Regardless of this, token holders are liable to receive a certain percentage of the fees as their profits,as well as a means of encouraging further participation in the ecosystem. This fee is subject to certain situations like the level of current funding in the TIDAL Treasury Wallet, as well as the total liability of all insurance pools and others.
TIDAL would also be used for governance purposes of the community, which means that stakeholders will be able to propose, vote, and implement changes to the protocol in a transparent and collective fashion.
Long-time holders of the token would also be able to vote on backbone governance issues of the protocol, which include the audition processes, risk assessment, and much more.
Why is Tidal Building on Polkadot?
Polkadot is a notable n Layer 1 platform that has its focus on interoperability. It also serves as a mechanism that allows heterogeneous blockchain networks to communicate with each other.
Tidal is building on Polkadot as it affords users to use the network with a level of confidence. While there might be considerably more hacking incidents on Ethereum-based platforms, Polkadot might also have its own inherent vulnerability. However, Tidal makes up for this by providing smart contract covers that allow users to protect their assets at will.
Tidal protocol is a DeFi insurance protocol that is built on Polkadot. As a novel insurance product, it seeks to cater for the development and advancements made in the DeFi space over time.
Although other insurance products exist in the market, they mostly are unable to cater for the capital intensive nature of the DeFi space, which is where Tidal and its pool creation feature comes in.
Tidal’s native token, through its profit-sharing feature and governance mechanism, would serve as an incentive for users to actively participate in the market.
Bitcoin Price Hit 11-Week Low: BTC Retesting The Lowest Weekly Close Since February
In early Sunday trading, BTC prices had fallen to their lowest levels for over 11 weeks, hitting $46,700 before a minor recovery.
The last time Bitcoin dropped to these levels was at the end of February during the second major correction of this ongoing rally. A rebound off that bottom sent prices above $60K for the first time in the two weeks that followed.
Later today, Bitcoin is going to close another weekly candle. In case the candle closes at those levels, this will become the worst weekly close since February 22nd, when BTC ended the week at $45,240, according to Bitstamp. Two weeks ago the weekly candle closed at $49,200, which the current lowest week close since February.
Second ‘Lower Low’ For Bitcoin
This time around, things feel slightly different and the bearish sentiment is returning to crypto-asset markets. Since its all-time high of $65K on April 14, Bitcoin has made a lower high and has now formed a second lower low on the daily chart, which is indicative of a larger downtrend developing.
Analyst ‘CryptoFibonacci’ has been eyeing the weekly chart which also suggests the bulls could be running out of steam.
$BTC Weekly Chart.
— CryptoFibonacci (@CryptoFib) May 15, 2021
The move appears to have been driven by Elon Musk again with a tweet about Bitcoin’s energy consumption on May 13. Bitcoin’s fear and greed index has dropped to 20 – ‘extreme fear’ – its lowest level since the March 2020 market crash. At the time of press, BTC was trading at just under $48,000, down 4% over the past 24 hours.
Market Cap Shrinks by $150B
As usual, the move has initiated a selloff for the majority of other cryptocurrencies resulting in around $150 billion exiting the markets over the past day or so.
The total market cap has declined to $2.3 trillion after an all-time high of $2.5 trillion on May 12. Things are still high on the long term view but losses could accelerate rapidly if the bearish sentiment increases.
Not all crypto assets are correcting this weekend, and some have been building on recent gains to push even higher – although they are few in number.
Those weekend warriors include Cardano which has added 4.8% on the day to trade at $2.27 according to Coingecko. ADA hit an all-time high on Saturday, May 15 reaching $2.36, a gain of 54% over the past 30 days.
Ripple’s XRP is also seeing a resurgence with a 13% pump on the day to flip Cardano for the fourth spot. XRP is currently trading at $1.58 with a market cap of $73 billion. The only other two cryptocurrencies in the green at the time of writing are Stellar and Solana, gaining 3.7% and 12% respectively.
North Dakota City to Accept Cryptocurrencies for Utility Bill Payments
Williston, a city in North Dakota, plans to accept cryptocurrencies for utility bills online payments, becoming the first in the state to adopt crypto assets.
According to City Finance Director Hercules Cummings, the city has partnered with BitPay, one of the largest bitcoin payment service providers in the U.S. Payments will be converted from crypto to fiat in real-time.
Paying Bills with Crypto
The city council would first monitor how citizens respond to crypto payments. Utility bill payments are the only bills available to be paid with crypto.
However, if volume and interest are significant, the city will expand the options by allowing landfills, permits, and licenses to be paid with crypto.
Individuals willing to do so only have to visit the official website of the city of Williston, enter their account information to receive an emailed BitPay invoice, and choose their digital wallet and the crypto in which they want to pay.
Citizens can benefit from cost savings when using crypto as well. Exchanges only charge 1% for every transaction, unlike other payment services, which can charge up to 3%.
North Dakota Embracing Technological Change
Cummings outlined that his city is only responding to a growing trend and technological changes. He added that cryptocurrencies represent innovation for the city’s finance department and a significant step to take the lead in the state and nationwide.
“We are pioneers in the state. This is just one of many, many things that’s going to be rolling out of the finance department. We’ve got a lot of exciting things to unveil later on to be the first of many. Our goal is to be industry leaders, not industry laggers.” Said Cummings.
Williston is the third government entity in the U.S. to embrace cryptocurrencies as adoption takes a fast pace in the country. Wyoming is one of those states, which registered Ripple as an entity and has several crypto-friendly laws.
Featured image courtesy of US News.
Bitcoin Mining Company Vows to be Carbon Neutral Following Tesla’s Recent Statement
It goes without saying that Tesla took center stage last week when the company announced it would no longer support bitcoin payments for its electric vehicles.
The message seems to have resonated, as Greenidge Generation Bitcoin Mining has vowed to be carbon neutral in 2021 and beyond.
Carbon Neutral Bitcoin Mining
After announcing plans to expand its Bitcoin mining operations last month, Greenidge is now looking to go entirely carbon neutral this year and in the future.
The company is committed to the cause, and it plans to invest in US-based renewable energy projects.
According to a recent press release, the company will also take part in the Regional Greenhouse Gas Initiative, which is a market-based program where participants sell CO2 allowances through auctions and invest the proceeds in renewable energy and energy efficiency.
Speaking on the matter was Jeffrey Kirt, the CEO of the company, who said:
“Our bitcoin mining capability is already best-in-class and seamlessly integrated with our electricity generation that powers thousands of homes and businesses. By taking the bold and unique step of making or cryptocurrency mining fully carbon neutral immediately – as opposed to some distant date in the future – Greenidge is once again leading in environmental efforts.”
Musk’s Message Resonates
Greenidge’s announcement comes days after the leading electric vehicle manufacturer, Tesla, revealed that it would no longer support bitcoin payments. As a reason for its decision, the company cited environmental concerns related to bitcoin mining.
Elon Musk, the company’s CEO, confirmed and reiterated that he is bullish on crypto but so long as it doesn’t have a negative environmental impact.
The company also said that it’s looking for ‘greener’ alternatives to Bitcoin so that it can continue accepting crypto payments. This led to many speculations about which cryptocurrency it would choose. Shortly after, Musk said that he’s working closely with Dogecoin developers to improve transaction efficiency, causing many to believe that the meme-inspired coin might be Tesla’s choice.
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