Space flight insurance to be offered by two DeFi platforms

An unusual crypto derivative product allowing individual users to be insurers for SpaceX flights will be launched by decentralized finance (DeFi) platforms Uma and Opium Network.

According to the announcement about the project, Opium Protocol will leverage the Optimistic Oracle of Uma in introducing the first-ever financial derivatives for SpaceX that can be utilized to avoid financial risks related to space flights and generate some income.

Part of the announcement read, “The derivative is built on decentralized financial structure and therefore accessible by anyone in the world.”

How the project works

Vocal crypto proponent Elon Musk’s space transportation company SpaceX launched its Smallsat Rideshare service recently, enabling smaller companies to “share space rides” in sending smaller “packages” into space for significantly lower prices.

Under the program, companies can have their payload delivered in space for as low as $1 million, a small sum considering the current rates of the space industry. On January 24, “Transporter 1” (the first Rideshare) launched, carrying with it in space 143 satellites.

The operation is not flawless and there’s the possibility that the launch will fail resulting in tremendous losses. Uma and Opium look to mitigate such risks by offering the DeFi derivative product that helps users insure their payloads or make some money by becoming an insurer, both can be accomplished in a fully decentralized manner.

A binary option

The new financial instrument works as a binary option – a contract that can have two potential outcomes, with the issuer of the agreement becoming the insurer, locking a specific amount of tokens on a blockchain. On the other hand, buyers will purchase insurance for their payloads.

If the Rideshare operation is successful, the Optimistic Oracle of Uma receives this outcome and the seller will be paid an insurance premium for the services offered. However, if in any event the rocket crashes, the contract buyer will be entitled to a corresponding compensation.

 

Image courtesy of Cointelegraph News/YouTube

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