Before we breakdown the details of the collaboration between EasyFi Network and Tidal Finance, let's get to know few things about the two decentralized finance giants.
As we know, EasyFi Network (EasyFi) is a universal layer 2 lending protocol built for decentralized finance with a focus on scalability, composability, and adoption. It was designed as an open and inclusive financial network infrastructure that runs on public networks to allow end-to-end lending of digital assets and related financial products.
Tidal Finance (Tidal) on the other hand, is the first cross-chain Defi insurance platform with an insurance market that gives users the ability to create custom insurance pools for one or more assets. They make Defi safer by providing insurance coverage for assets across chains in custom-balanced liquidity pools. Tidal also makes it possible for users to choose risk pools depending on their "risk appetite", then choose among the combination of protocols or assets with their coverage terms. With Tidal, liquidity providers can invest in pools that suit their risk/reward ratio.
The vulnerability of the decentralized finance to attacks and hacks is something worth looking into, though it is quite reasonable that Defi on its own is still in its early stage and constantly evolving, as more users are getting into the ecosystem with little to no experience of how things work, making them susceptible to losing funds.
EasyFi in collaboration with Tidal Finance aims to tackle this important issue. The partnership aims to provide insurance on EasyFi's lending protocol which will reduce the risk exposure of users losing funds. This partnership will make EasyFi deliver multiple-level insurance coverage to all its users as well as connected projects and by so doing, reduce massively the chances of losing funds.
The three core benefits in this collaboration between Tidal Finance and EasyFi Network include;
EasyFi users will have the privilege to choose risk pools depending on what they feel they can handle
There will be provision of insurance cover to the EasyFi's multi-chain protocol which will, in turn, ensure safer credit delegation together with microlending service
The collaboration will allow users to select from a combination of assets and their associated coverage terms like the period, premium, cover, and so on, after which they can tweak their insurance needs for their investment protection.
Let's now look into the roles of both parties (i.e. EasyFi and Tidal), in making the above benefits possible.
To start with, EasyFi will first insure its smart contracts from any possible failure and putting into consideration future occurrences that may not be favourable. Protection in security matters will be handled by Tidal's insurance coverage. Tidal will help secure all EasyFi platform's digital assets that are deposited by the users for lending.
There is a high possibility that EasyFi will commence deeper integration for liquidity pools which will involve the use of different metrics like the return on deposited capital or that of loss-of-principal risk, among others in order to make the evaluation of earnings and risks among different liquidity pools possible.
Lastly, Tidal will be responsible for the creation of custom insurance pools function for retails and users in general.
All these insurance measures put together by this partnership shows how dedicated both parties are in ensuring a risk-free system for users. The partnership will provide the highest possible level of security for lending protocol, including liquidity pools, etc.
These breakthroughs will most likely open the doors of Defi to more people, thereby creating room for more participants in the ecosystem and the crypto lending industries at large.