According to a press statement issued on Thursday, Ethereum-based (ETH) decentralized finance, or DeFi, risk management marketplace Risk Harbor will shortly acquire control of Terra’s Ozone Protocol.
Ozone is a decentralized insurance mechanism that protects the Terra DeFi ecosystem in the event of technological problems. The latter is a dual-token platform that includes the LUNA governance token and the Terra USD (UST) stablecoin, which has a 1:1 exchange rate with the US dollar. UST is backed by no underlying USD reserves.
Instead, LUNA uses an algorithm to collateralize it, and users can receive rewards by utilizing LUNA to fix the UST exchange rate. In terms of overall value locked, the network has acquired substantial traction.
When smart contracts fail to execute effectively on the Terra network, such as when consumers can’t withdraw money from UST savings accounts in the Terra Anchor Protocol, insurers who deposit UST can get coverage via Ozone. Risk Harbor, meanwhile, runs an Ethereum DeFi hub that allows coinholders to insure their DeFi assets for a one-time fee.
Other users, meanwhile, operate as underwriters, putting their at-risk funds into various insurance collateral pools in order to gain incentives.
Terraform Labs co-founder and CEO Do Kwon had the following to say about the development:
“Risk Harbor’s talented and ambitious team has extensive experience working with DeFi protocols in the blossoming risk management space, having created one of the leading permissionless coverage marketplaces on Ethereum. We’re thrilled for the Terra community to have Risk Harbor take the reins of Ozone and pioneer a capital-efficient and decentralized risk management marketplace for the Terra ecosystem at large.”
Blockchain security firms such as Oak Security and Certik are presently auditing Ozone. Ozone will be entrusted to Risk Harbor’s developers for maintenance and management, pending the outcome of a Terra community governance referendum.