Understanding Insurance funds in the context of 420 DAO

420 DAO
2 min readFeb 15, 2022

We have often heard that cryptocurrencies are volatile, which has discouraged investors from participating in lucrative opportunities in the growing crypto-verse. While several cryptocurrencies use different protection methods against volatility, they fail to deliver. However, 420 DAO has taken an innovative approach to maintain stable operational integrity during volatility periods and simultaneously create a robust DAO.

420 DAO is a DAO that promotes a decentralized digital future using three pillars of building, investing, and governing. The 420 DAO ecosystem is powered by the 420 tokens that have become a magic Internet Number. 420 DAO has built an Insurance Fund as a part of its Treasury to hedge against market stresses.

Treasury Insurance Fund by 420 DAO

The concept of Insurance Fund was initially proposed by derivatives exchanges such as Binance, Bitmex, Deribit, etc to battle volatility. The fund is essentially a separate pool of capital that helps the exchange stay afloat during high volatility periods and reduces losses for its users. The fund itself is leveraged to counteract forced liquidations when no one takes positions in the order book and to pay winning traders.

These funds are essential for crypto trading as crypto exchanges are not regulated by any centralized organizations that can protect the users from risks. 420 DAO has taken a unique and interesting approach to Insurance Funds by combining it with its Treasury. The fund helps in handling counterparty, credit, or smart contract crises while simultaneously helping other protocols that require capital influx in the bear markets.

As the project develops, the Insurance Fund will also take value from unprepared players in the dApp ecosystem, a mechanism deployed by several centralized exchanges.The fund also helps in keeping 420 DAO decentralized as the Insurance Fund is a part of the Treasury. The governance token holders automatically become part owners of the fund.

Using this fund, 420 DAO has added more utility and value for the token holders while ensuring a stable and secure roadmap with constant development.

About 420 DAO

420 DAO is a decentralized autonomous organization that aims to build the right decentralized digital future. It is a coordinating and supporting body that promotes the development of decentralized economies using its robust tools and 420 DAO token. The project is a revolutionary DAO that has established a dedicated community of crypto proponents, thought leaders, builders, and investors.

The 420 DAO ecosystem is powered by 420 token that has in-build properties such as Store of Value Membership Value Governance value. To learn more about 420 DAO visit,

Website | Telegram | Twitter | Discord

--

--