Welcome to Decentralized Insurance - Kleros & Unslashed Finance unite.
What is Unslashed Finance?
Unslashed.Finance provides decentralized insurance using a sophisticated cover mechanism complimented by a simple and intuitive user experience to offer cover throughout the blockchain ecosystem.
Unslashed provides various types of risk protection including: smart contract failures, exchange hacks, oracle malfunctions, validator slashing, stablecoin pegs and more.
Any user can provide risk coverage by allocating collateral which in turn earns yield and provides insurance cover to the wider ecosystem.
Why Unslashed needs Kleros for open and neutral on-chain arbitration
A key feature of the Unslashed platform is Kleros-backed dispute resolution which resolves any claims brought by Unslashed users.
As an open and neutral arbitration system, Kleros can be used to resolve claims in a fully unbiased and transparent way.
All user claims pass through a standard challenge period during which anyone can challenge them. If no one challenges them, they are accepted. If they are challenged, they are reviewed and adjudicated in a fully decentralized manner via Kleros.
Valid claims are automatically paid out to the user in question and rejected claims withheld.
What is the Unslashed claims process and where does Kleros fit in?
Any user of an application covered by an Unslashed insurance policy can instigate a claim if an incident occurs. The claim is then reviewed and if deemed valid, the user will be eligible for compensation which is automatically paid out by the smart contract.
In the case of a challenged claim, Kleros jurors will be called to resolve whether or not the claim should be processed or rejected.
We’ll get into the claims process in more detail below but it’s essentially a deposit - challenge mechanism in which the user makes a deposit with their claim starting a ‘challenge’ period allowing anybody to review the claim and if necessary, challenge it.
If the claim goes unchallenged, the user receives their cover payout, if not the claim is sent to Kleros jurors in order to rule if it should be paid out or not.
Making a new claim
To make a claim, you simply click on the ‘Claims’ tab in the navigation bar followed by ‘Fill a claim’.
You will be taken into the claims management interface as shown above. Here, you have the option to select a specific blockchain App (of those under cover) or, if you have your own cover, you can claim by selecting one of those under ‘My Covers’.
By choosing Deversifi in ‘My Covers’, we’re now in step two of three in the claim process. Here, we have the option to review the Policy details of the cover (this helps to ensure your claim is valid) and selecting a ‘New Incident’. If there are already open incidents on this cover, you can select a ‘Reported Incident’ instead.
When a new claim is made, the claimant should specify the amount they want to be compensated for.
In order to avoid potential malicious behaviour, they will also need to lock a deposit consisting of a minimum deposit (or a fraction of the claimed amount) + the potential arbitration cost. This deposit will be reimbursed if the claim is successful.
After the claim has been successfully made, it enters the challenge period. If it's not challenged within this period the claim will be marked as resolved and successful meaning the claimant will be paid out automatically.
If the claim is challenged, the case is sent to Kleros for final resolution with the possibility of appeal. The losing side will pay the arbitration cost and the winning side will receive the remaining deposit of the other party (losing side).
Policies
Each cover has its own set of policies which can be found via the Unslashed UI when providing cover. To view the policy when making a claim click the outlined button in the ‘Claims’ section of the interface.
Much like traditional insurance, policies outline expected topics such as, period of insurance, what’s insured, what’s not, premium cost and so on. The example above uses USDT but all policy documents will appear in the same section regardless of the platform covered.
Note: In order to make a claim the ethereum address of the claimant should have owned the insurance token of the Unslashed Cover in question at least one block prior to the occurence of the event covered (as defined in each cover policy).
Challenge a Claim
After the Claim has been created it can be challenged by any user within the challenge period. The challenger must pay the required amount in ETH to cover arbitration costs
After the challenge has been successfully made the claim changes its status to Disputed and a dispute in Kleros Court is created.
A claim can be challenged only once but can be appealed numerous times. The Kleros Court appeal mechanism can be read in more detail here, although if the claim was readjusted then it can be challenged again.
Note: Evidence can be also provided by anybody at any time until the claim is resolved.
Potential Dispute Outcomes
If the claimant wins the dispute they will get the claimed amount and their initial deposit will be reimbursed. They will also get the challenger's deposit as a reward (minus arbitration fees) which are paid to Kleros jurors.
If the challenger wins they receive the initial deposit of the claimant (minus arbitration fees), receive their own deposit back and the claimant is not compensated.
If the arbitrator refuses to rule both sides get their deposits back and the claimant gets no compensation. In this case the arbitration cost is split equally between the parties.
The dispute ruling can be appealed by depositing the appeal fee within the dispute's appeal period. Appeal fees can be crowdfunded and the sum of both fees will be distributed proportionally between crowdfunders who contributed to the winning side.
Appeals
All claims are able to go to appeal if either party feels the decision rendered was unjust. Appeal fees rise with each appeal until eventually, the final round of appeal is decided by the Kleros General Court.
Either party can appeal or, call on crowdfunded appeals in which any user can contribute to the overall appeal cost. Once a crowdfunded appeal is fully funded, the dispute is arbitrated again. If it does not reach full funding within the appeal period, the previous decision is upheld.
If a dispute is not appealed at all, it receives the final ruling from the arbitrator and the claim is marked as resolved.
Adjusted claims
There may be a situation in which the claimant is eligible for compensation but the amount that they specified is off the mark. In this case, after the claim is rejected the claimant has the opportunity to make a new claim with the adjusted amount.
This is possible only once.
In particular, to avoid an individual claim stalling the resolution of a larger group claim.
This claim should be done within a specific timeout to avoid stalling the arbitration process.
The Future Beckons
We’re delighted to partner with Unslashed in their quest to provide fully decentralized insurance cover to the DeFi ecosystem. With over $100m locked TVL already, a bright future beckons for a fully open, permissionless and arbitration backed insurance platform.
Where Can I Find Out More?
Join the Kleros Discord
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