Cozy Finance is a risk management protocol in DeFi, providing automatic and transparent protection tools through smart contracts to help users and projects avoid losses from hacks, smart contract vulnerabilities, or stablecoin de-pegging.
Through Safety Modules and Protection Markets, Cozy Finance serves as an on-chain emergency fund and decentralized insurance market, providing flexible protection solutions for individuals, projects, and the entire blockchain ecosystem.
MAIN CONTENT
Cozy Finance is a DeFi risk protection protocol with Safety Modules and Protection Markets.
Key features: automatic compensation, customizable insurance, ecosystem-wide protection.
Backed by Electric Capital and many large funds, aiming for sustainable growth in DeFi.
What is Cozy Finance?
Cozy Finance is a risk protection platform in DeFi, operating on Ethereum, providing automatic compensation mechanisms in the event of incidents such as hacks, smart contract vulnerabilities, or stablecoin de-pegging.
Unlike traditional insurance, Cozy Finance operates trustlessly through smart contracts, eliminating intermediaries and complex claims processes.
This is a solution highly regarded by the DeFi community for its transparency and flexibility in setting protection conditions.
"Cozy Finance helps build trust in DeFi by providing an automatic safety layer, minimizing damages from unexpected incidents."
Electric Capital, Seed Round Announcement, 2020
What is the mission of Cozy Finance?
The mission of Cozy Finance is to enhance trust and sustainability for the DeFi ecosystem through transparent, user-friendly, and decentralized protection products.
The DeFi market is growing rapidly but often faces security risks. Cozy Finance emerges as a "default safety" layer, creating a reliable foundation for projects to grow sustainably without losing user trust.
How does Cozy Finance work?
Cozy Finance uses smart contracts to automatically handle the entire process: from defining risk conditions, pricing, to compensation payments. This minimizes costs and eliminates human error.
Modules can be set up for individual projects or the entire chain, with flexible funding sources such as internal funds, transaction fees, or community contributions.
This approach is similar to on-chain insurance funds but optimized for transparency and scalability.
What are the standout features of Cozy Finance?
Cozy Finance offers three core features: trustless automatic compensation, customizable insurance coverage, and scalability of protection for the entire ecosystem.
For example, users can receive protection against USDT de-pegging up to $100,000 for only a cost of $110. This is evidence of the platform's efficiency and cost optimization.
"The ability to define unique risk conditions is key for Cozy Finance to fit various DeFi projects."
Dragonfly Capital, Cozy Finance investor, 2020
What are the Safety Modules of Cozy Finance?
Safety Modules are on-chain emergency funds that help projects protect users against risks such as hacks, bad debts, or asset loss, with customizable compensation limits, for example, $25,000 per user.
Projects can choose different funding sources: from internal funds, transaction fees, to community contributions. Users are also guaranteed control through a DAO, increasing transparency and fairness.
What are Protection Markets in Cozy Finance?
Protection Markets are decentralized markets where users can buy or provide protection against risks such as hacks or stablecoin de-pegging.
Anyone can create a new market by defining risk conditions. Buyers receive compensation if an incident occurs, while providers benefit from profits corresponding to the risks they accept.
"Protection Markets provide a transparent risk pricing mechanism that encourages both sides to engage in the ecosystem."
Variant Fund, Cozy Finance investor, 2020
How did Cozy Finance successfully raise funds?
On September 3, 2020, Cozy Finance successfully raised $2 million in a Seed round led by Electric Capital, with participation from Variant Fund, Dragonfly Capital, Robot Ventures, Slow Ventures, Volt Capital, Spencer Noon, and Ed Moncada.
Being backed by many large funds proves the long-term potential and credibility of Cozy Finance in the DeFi space. This is a crucial factor helping the platform scale and reinforce community trust.
Investor Role Year Electric Capital Lead Investor 2020 Dragonfly Capital Strategic Investor 2020 Variant Fund, Robot Ventures, Slow Ventures… Participating Investor 2020
Who is Cozy Finance suitable for?
Cozy Finance is suitable for both individual users looking to protect assets against risks and DeFi projects wanting to build trust by implementing their own Safety Modules or Protection Markets.
Flexibility in design and scalability makes Cozy Finance an important tool for major blockchain ecosystems, from Ethereum to Layer 2 and other scaling chains.
"In DeFi, trust is the scarcest asset. Cozy Finance is helping to restore that."
Spencer Noon, investor, 2020
Frequently Asked Questions
Can Cozy Finance replace traditional insurance?
No, Cozy Finance does not replace traditional insurance but focuses on specific risks in DeFi such as hacks, faulty smart contracts, or stablecoin de-pegging.
Do users need KYC to use Cozy Finance?
No, Cozy Finance operates trustlessly on the Ethereum blockchain, does not require KYC, and all processes are handled automatically.
What type of assets does Cozy Finance support?
Safety Modules accept USDC, stETH, LP tokens, and other popular on-chain assets, depending on the project configuration.
Is the protection cost on Cozy Finance high?
Costs are priced based on supply and demand. For example, protection against USDT de-pegging up to $100,000 only costs about $110.
Who controls Cozy Finance?
Cozy Finance is governed in a decentralized manner through a DAO, ensuring transparency and fairness for the community.
Source: https://tintucbitcoin.com/cozy-finance-la-gi/
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