Securing Institutional Trust: Luganodes is now insured by Chainproof

Luganodes now provides Chainproof insurance as a included feature for all institutional investors, providing enhanced security and unparalleled service.

Introduction

In a strategic move to further fortify the security and trust in our institutional staking services, Luganodes is thrilled to announce its recent contract with Chainproof Insurance. Chainproof is the world’s first regulated insurance carrier for smart contracts and slashing risks. Incubated by Quantstamp, and bolstered by backing from traditional insurance industry giant Sompo and reinsured by Munich Re, Chainproof is set to redefine the landscape of insurance in web3. Their unique offering is tailored to address the unique needs of cryptocurrency investors and DeFi enthusiasts, marking a pivotal moment in the evolution of digital asset protection.

Insurance Issues in DeFi

In the rapidly evolving world of Proof-of-Stake blockchains, one of the most significant impediments to institutional investment is the apprehension regarding the security of funds. This concern, primarily rooted in issues such as slashing, creates a tangible barrier for institutional investors. Slashing, a punitive measure employed within blockchain networks, can be triggered by both intentional attacks and unintentional operational failures, affecting validators regardless of the cause.

This perceived risk in fund security leads to a noticeable stagnation in the growth of the DeFi ecosystem, particularly affecting corporate staking. For the DeFi space to thrive and attract substantial institutional investment, it is crucial for businesses within this sector to take proactive measures. The implementation of a regulated insurance policy is a pivotal step in this direction. Such a policy would not only provide a safety net for the invested funds but also enhance the credibility and attractiveness of DeFi investments for institutional players.

However, the involvement of conventional insurance companies in this endeavour might prove challenging. Traditional insurance firms often lack the technical expertise needed to accurately assess and underwrite insurance policies for smart contracts, a core component of the DeFi infrastructure. Moreover, the DeFi insurance market currently includes offerings that are not regulated and fail to comply with critical Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. This lack of regulatory compliance further dissuades institutional investors, who typically operate within stringent regulatory frameworks.

To bridge this gap, it is essential for DeFi-associated businesses to explore innovative insurance solutions tailored to the unique nature of the industry. Such solutions must not only provide adequate risk coverage but also align with regulatory standards to meet the stringent criteria of institutional investors. By fostering a secure and regulated environment, the DeFi space can unlock its full potential, paving the way for substantial institutional investment and further growth.

The Chainproof Solution

Underwriting insurance is an essential part of the insurance process which determines the risk and profitability of offering a policy. Bolstered by Quantstamp's backing and expertise, Chainproof's insurance policy stands unrivalled. Quantstamp stands as a leader in blockchain security and has an in-depth understanding of the space, having completed over 700 audits and secured more than $200 billion in digital assets.

Sebastian Banescu (@banescusebi) spoke at Crypto Assets Conference #CAC23B in Frankfurt today on the importance of smart contract & slashing insurance 🛡️

We always enjoy sharing our knowledge & appreciate everyone who stopped by to listen in! pic.twitter.com/MjIaBrSQsX

— Chainproof Insurance (@ChainproofDAI) October 18, 2023

Chainproof's insurance policies introduce a notable development in blockchain security providing companies in the industry with best-in-class insurance policies that are fully regulated and compliant. Chainproof provides a crucial layer of protection against potential vulnerabilities that might not be immediately apparent, thereby enhancing the operational confidence and stability of DeFi platforms. This aspect of Chainproof's service is particularly important for maintaining the robustness of these platforms in a dynamic and often unpredictable digital finance environment.

Support from Insurance Veterans

While understanding the needs of modern DeFi technology is essential, one cannot disregard the wealth of experience that traditional providers have amassed in multiple industries over decades. Chainproof has this experience covered through its partnership with Sompo, and re-insurance from Munich Re, both globally acclaimed leaders in property and casualty insurance with a track record dating back to the 1880s.

Quantstamp encountered resistance in the insurance industry when seeking underwriters for this new risk landscape. However, in the summer of 2021, Quantstamp partnered with Sompo to create Chainproof. Since then, Chainproof has developed a pioneering cyber-insurance policy for non-custodial DeFi platforms. It has actively collaborated with regulators such as the Bermuda Monetary Authority to establish a legal framework for this innovative product.

Chainproof recently marked its 2-year anniversary and remains at the cutting edge, delving into blockchain insurance markets, assessing real-world risks, exploring regenerative finance, navigating the intricacies of impact insurance, and adapting to the ever-changing regulatory landscape. As the lead sponsor of Staking Summit and co-host of D1 Conf: Decentralized Insurance Conference, they are active participants in shaping the future of web3 security and insurance.

Quantstamp X Chainproof X Luganodes

In our earlier announcement, we highlighted our Quantstamp audit. This audit fortified our systems and marked the initiation of purchasing Chainproof insurance. Quantstamp’s auditing services, therefore, go hand in hand with Chainproof’s insurance products.

This system of auditing and insuring DeFi organisations provides a robust mechanism to ensure essential security practices are implemented, and a safety net added. In this process, customers of Quanstamp-Chainproof achieve and showcase high standards of security, establishing them as reliable decentralised services.

Conclusion

Luganodes’ purchase of Chainproof insurance could not have come at a more opportune moment. The DeFi market is booming, and there is a consistent rise in institutional investing. Despite its remarkable growth, we acknowledge that the sector remains plagued by persistent threats of hacks and exploits. Mitigation of these risks is important to improve enterprise trust in this ecosystem, a vision shared by Quantstamp and Luganodes. As evident from our recent triple certification, Luganodes is actively working towards creating an impenetrable security system. With Chainproof insurance, our infrastructure is more dependable than ever. We aspire that, through collective efforts, the entire sector witnesses stable, secure growth.

About Luganodes

Luganodes is a world-class, Swiss-operated, non-custodial blockchain infrastructure provider that has rapidly gained recognition in the industry for offering institutional-grade services. It was born out of the Lugano Plan B Program, an initiative driven by Tether and the City of Lugano. Luganodes maintains an exceptional 99.9% uptime with round-the-clock monitoring by SRE experts. With support for 40+ PoS networks, it ranks among the top validators on Polygon, Polkadot, Sui, and Tron. Luganodes prioritizes security and compliance, holding the distinction of being one of the first staking providers to adhere to all SOC 2 Type II, GDPR, and ISO 27001 standards as well as offering Chainproof insurance to institutional clients.