Hedging Against PoS Risk and More With DSLA Protocol
DSLA Protocol offers stakers and users a risk management tool to navigate third-party pitfalls.
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Reliance on third-party service providers creates risks for end-users in sectors from blockchain and internet services to transport and logistics. All too often, there is little to no recourse when these services are sub-par. DSLA Protocol aims to change that.
Tackling Risk Head-On
Imagine an internet service provider runs into problems, and its users suddenly lose connectivity. This happens all the time, and all users can do is contact support and hope they eventually get their WiFi up and running again.
The idea of actually getting reimbursed for the drop-in connection is out of the question with today’s infrastructure.
Third-party service users in all sectors typically lack the resources and legal expertise needed to negotiate fair service agreements and insurance programs. By design, negotiating claims or settling disputes is time-consuming and difficult to follow through with.
DSLA Protocol, meaning decentralized service-level agreement protocol, is a risk-management framework that aims to reduce the risk of exposure to service delays and financial losses for end-users.
Features include:
- Prediction markets which allow platform participants to swap and manage tokenized risk with other users.
- The ability to trade said tokenized risk at leverage.
- Futures markets, allowing users to hold long and short positions of various events and expectations.
- Staking platform to earn additional SLA staking awards.
- DSLA token burns to ensure utility and longevity of the token model.
- Community-led programmable SLAs to generate new use cases for users.
The team also plans to roll out tools for developers and non-developers to custom design specific features of their risk management plan. An active marketplace will allow DSLA to create reliability forecasts too. With these forecasts, users can get a glance at third-party risk.
All three of these features are expected to launch in Q2 2021.
DSLA Protocol has a use case for many developers and infrastructure providers who can execute service agreements and underwrite insurance policies with crowdfunded liquidity.
Use Cases for DSLA Protocol
DSLA Protocol verifies service providers’ performance, reliability, and capital commitments on a censorship-resistant blockchain network. The protocol has public liquidity pools that anyone can contribute to, earning a bonus when third-party providers meet the service level agreements decided by both parties.
Liquidity providers lose funds when those agreements are broken, and those funds go towards paying out insurance policies taken out by end-users. The system allows users to earn liquidity fees or hedge against the risk of using virtually any service.
1. Proof of Stake Delegation
Proof of Stake delegators can stake against the risk of delegation, for example, in which they hand over token rights to validators. These third-party validators and staking pool operators are then incentivized to meet expectations, creating a mutual incentive for good performance and a hedge against the risk of failure. Here’s an example of the benefits for PoS delegators:
Providing a fairer, more reliable user experience would likely result in more demand for delegators on these networks.
DSLA Protocol is currently integrating its solution for PoS networks like Polkadot, Cosmos, Harmony, Tezos, Band, and more.
2. Impermanent Loss
DSLA Protocol users can hedge against impermanent loss in DeFi, a type of risk that occurs when staked funds or on-chain assets begin to lose value.
Crypto users and liquidity providers encounter this loss in NFTs, Automated Market Makers (AMMs), and other protocols. DSLA Protocol has already planned support for Open Sea and Uniswap this year.
3. Enterprise and Environmental Use
Enterprise customers can use DSLA Protocol to hedge against Layer 2 infrastructure risks, potentially solving a major pain point in the nascent scaling space which is still in development.
Major financial institutions are interested in DeFi and blockchain services but wary of the untested nature of some of the infrastructure. Technology like DSLA Protocol could help bring more investment into blockchain by hedging against enterprise risk.
As mentioned earlier, the technology has a use case in internet services and cloud computing, where bad connectivity can be an issue.
DSLA Protocol even lists use cases such as enforcing environmental standards such as clean air quality and other related policies using the staking pools. The technology could be used in logistics, supply chain, transport, and other sectors.
Tokenomics
DSLA token powers the protocol, unlocking access to exclusive features and, crucially, fuelling the execution of agreements on the network. The ERC20-supported tokens are staked by service providers and service users and transferred between both parties.
The native ERC20 token is deflationary and set to decrease in supply over time due to a built-in burn mechanism triggered when agreements are executed, claims are processed, and other operations are carried out. The tokens also act as an access key to the DSLA Protocol decentralized application.
Building Solutions for a Safer Web 3.0
The solutions proposed by DSLA Protocol and parent company Stacktical🖐 could make staking on PoS blockchain networks far more appealing, leading to wider adoption of blockchain technology.
However, in theory, the true use case goes far beyond that.
In the aviation industry, flight delays are a major problem that could be hedged against using decentralized service level agreements.
Climate change policies, local government council decisions, brick and mortar business agreements, and the sale of digital products and services could all be covered by the system DSLA Protocol is putting in place, painting a promising picture of how customer protection may look in the near future.
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