Claim
Last updated
Last updated
A Claim represents the transfer of rights from a hacked user to a buyer, granting them entitlement to any funds recovered by a compromised protocol within a specified period. Claims enable users to mitigate losses while creating a market-driven approach to asset recovery in DeFi.
How Do Claims Work?
When a DeFi protocol experiences a hack, affected users face uncertainty regarding fund recovery. Instead of waiting indefinitely, users can sell their claims, allowing buyers to speculate on potential recoveries and assume the associated risks.
Key Benefits of Claims Trading
š¹ For Victims ā Instantly recover a portion of lost funds instead of waiting for uncertain reimbursements. š¹ For Investors ā Gain exposure to potential asset recoveries and trade claims as a new yield opportunity. š¹ For DeFi Ecosystem ā Introduces liquidity and price discovery for hacked fund claims, reinforcing confidence in DeFi insurance mechanisms.
Real-World Example: CeFi vs. DeFi
š CeFi Example ā FTX Collapse After FTX collapsed, users who had funds on the platform were unable to withdraw, effectively losing everything. However, their claims to potential fund recoveries could still be traded. This allowed users to transfer risk to investors willing to speculate on the percentage of funds that would eventually be recovered.
š DeFi & Incentive In the decentralized world, Incentive brings this concept on-chain, enabling hacked users to sell their claims directly, while buyers assess probabilities and trade claims based on real-time market conditions.
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