Mutual DAO System (MDS) is the first global mutual aid system based on blockchain & smart contract, which also leverage DAO (Decentralized Autonomous Organization). It combines the traditional mutual insurance model with blockchain and smart contract which provide a low operation cost and guarantee of compensation for risks.
The investment institutions of MDS include well-known blockchain VCs such as Fenbushi Capital, Danhua Capital, Fundamental Labs and etc.
We gratefully thank all the community friends and MDS fans that the project could not go far without your support and trust. MDS project focuses on long-term development, and our community will always follow the principle of fairness and transparency. We biweekly release our project updates in form of the following progress journal:
MDS DeFi Insurance Contract
MDS Mutual Pool 1 – DeFi Mutual Insurance Contract
Any DeFi user can buy MDS from Uniswap, then join this pool through Metamask or other Ethereum wallet. The contract will cover below DeFi contracts including MakerDAO, Compound, Uniswap, Aave, Curve.fi
MDS 2.0 White Paper – Mutual DAO
Based on the market research result, MutualDAO will focus on below:
MDS Mutual Pool 1 – Smart contract security issue coverage, v2 is in development which will add insurance policy value AMM logic
MDS Mutual Pool 2 – AMM LP token impermanent loss coverage
MutualDAO release DeFi hack event database, which listed the details of 24 security events in DeFi area and will be an important data input for DeFi insurance actuarial
MutualDAO listed on snapshot, all MDS holder and vote the proposals there
Snapshot is a off-chain, gasless, multi-governance community polling dashboard used by many DeFi projects.
Blockchain Insurance Trends
On 14th December, Hugh Karp the founder of DeFi insurance project Nexus Mutual was targeted and tricked into making transaction on the attacker’s address of Metamask, this resulted in the loss of 370,000 NXM tokens, valued at approximately $8.33 million. On 28th December, Cover Protocol, another star DeFi insurance project, was also exposed to a hacker attack, the hacker used contract bugs to issue more than one trillion tokens and then burned a large number of them. Finally, the attacker sold the tokens in batches through DEX for cash, making a profit of more than 4400 ETH, worth more than 3 million US dollars.
The original intention of DeFi insurance is to provide protection for DeFi project and reduce risk-related loss. However, two popular DeFi insurance projects were frequently attacked by hackers due to their own vulnerabilities, leading to the loss of confidence in DeFi insurance projects, and people even began to question whether DeFi insurance could function as real insurance? This is an issue that all DeFi insurance projects should seriously consider and solve.
At present, more and more DeFi projects with insurance functions or modules are advertised, which has become one of the new direction of DeFi. We believe it is necessary to illustrate the fundamental concepts of insurance so that DeFi players can have a clear understanding of DeFi insurance.
The insurance operates over risk. In traditional insurance theory and practice, risk only refers to the uncertainty of loss. This means that once the risk occurs, it can only be considered as a loss, and there is no chance to gain profit from the risk. In that sense for Nexus Mutual, user could file a claim if the digital assets of the DeFi project it insured were hacked due to a contract bug. The risk of a hacking attack would normally result in the loss of digital assets, rather than the profit for insured person. This is the definition of risk in traditional insurance industry.
In addition, there is another definition of risk, that is, the uncertainty of income. This means the consequences could be losses, gains, or no losses and no gains. For example, the risk of price fluctuation after purchasing BTC, if the price of BTC rise, the buyer will gain profit; if the price drops, the buyer will suffer losses. This type of risk is not included in the business of traditional insurance. In the traditional finance field, financial derivatives such as options are used to hedge the risk of underlying price fluctuations, so this kind of solution is generally categorized under financial derivatives, rather than insurance. The similar example in DeFi is OPYN, which provides risk protection to users through put options to cover the loss from the crypto fluctuation. Strictly speaking, such projects should not be called insurance. In addition, there are market forecast, CDS and other financial models serving the same purpose.
MDS Token Info
Total Circulating: 1,199,999,624