mbank
Insights Insurtech North America

Parametrix Looks to Secure Funds for Crypto Companies During Cloud Outages With New Coverage

Following the Axie Infinity heist that took place in late March, many companies in the crypto space have become more aware of their security, and what must be done to protect consumers’ digital assets. Parametrix, the provider of technology downtime insurance, has tackled this with its Cloud Downtime Insurance for Crypto, insuring crypto companies against cloud outages.

Should a crypto exchange, wallet, DeFi or platform become inaccessible due to an outage of a public cloud provider, Cloud Downtime Insurance for Crypto from Parametrix would enable the crypto company to help protect its customers from losses. In addition, the 2022 Crypto Confidence Report, a survey sponsored by Parametrix, indicates trust is a top concern both for crypto users and non-users; Cloud Downtime Insurance for Crypto is designed to help build confidence in the crypto market.

Survey data reveals outage and trust issues for crypto 

In tandem with the launch of Cloud Downtime Insurance for Crypto, Parametrix sponsored the 2022 Crypto Confidence Report, a survey conducted by Propeller Insights of 522 consumers including both crypto users and non-users designed to shed light on current consumer perceptions of crypto and the impact of outages on consumer trust.

Service outages on crypto platforms play a big part in damaging consumers’ trust in and loyalty to crypto companies. Among survey respondents, 45 per cent of crypto users have experienced a service outage on a platform they use for trading crypto and were unable to access their accounts or funds at some point in time. This directly impacts consumer loyalty and retention to their crypto platform of choice. When an outage occurs, 71 per cent of crypto users said they would either withdraw all of their money from that platform once it became accessible again or switch to another platform, exchange or wallet after the outage ended.

Parametrix’s 2021 cloud monitoring data showed that, on average, one of the three major public cloud providers experienced an outage of at least 30 minutes every three weeks.

Trust is a top concern for crypto users and non-users

Trust is a major concern as crypto tries to go mainstream. Two-thirds (66 per cent) of crypto non-users said they ‘do not trust crypto platforms, exchanges and wallets’ while just 10 per cent of crypto users feel the same way. But even among crypto users, trust is still a looming concern as the majority of crypto users (58 per cent) reported they only ‘somewhat trust crypto platforms, exchanges and wallets’.

Parametrix’s Cloud Downtime Insurance for Crypto is designed to help eliminate the crypto trust gap. Parametrix shifts the risk of inaccessible platforms, exchanges, wallets, DeFi, and trade executions from the crypto companies to the largest reinsurers in the world – meaning if there is a cloud outage that renders them inaccessible, customers can be made whole. By leveraging insurance, the crypto industry can increase trust among its users.

Insurance increases trust in crypto providers

Nearly two-thirds (65 per cent) of all respondents said they would be more likely to buy, trade, or store cryptocurrency on a platform, exchange, or wallet that offered compensation if that platform became inaccessible due to a technology outage. Among crypto users, a whopping 89 per cent reported they would be more likely to buy, trade or store cryptocurrency on a platform that offered compensation if it were to become inaccessible. More than half of crypto non-users (52 per cent) agree, saying they would be more likely to engage in crypto activities through a company that has downtime compensation in place.

“Consumers and businesses are more likely to transact with crypto companies that have the trust and financial backing to ensure customers can be made whole in the event of an outage,” said Yonatan Hatzor, Parametrix co-founder and CEO. “Parametrix created Cloud Downtime Insurance for Crypto to help crypto companies build trust by maintaining cash flow to recover from a cloud downtime event, recouping revenue lost during an outage, and maintaining their reputation with customers.”

With Parametrix’s Cloud Downtime Insurance for Crypto, crypto companies predetermine their insurance coverage by setting in advance the per-hour coverage they need to cover financial damages of cloud downtime. If a cloud outage occurs, crypto companies quickly receive the funds they need. Unlike traditional claims, with Parametrix, there is no drawn-out claims process. Companies are indemnified within 15 business days, enabling them to recover losses, repair damages and reaffirm their commitments to customers and investors.

Parametrix cloud downtime insurance helps crypto companies:

  • Cover liabilities and maintain trust by securing funds to compensate customers and prevent churn due to cloud outages.
  • Insure their biggest business expense, cloud spend, by mitigating the risk of outages as their cloud spend grows.
  • Protect their revenue and cash flow by maintaining liquidity, business continuity and contingency cash flow.

Author

  • Francis is a journalist and our lead LatAm correspondent, with a BA in Classical Civilization, he has a specialist interest in North and South America.

Related posts

Women in Tech Speak Out: How VCs Can Help Black Women Founders

Gina Clarke

8.8% of UK Households Missed or Defaulted Bill Payments in March 2023; Reveals Which?

Tom Bleach

CI&T: Rebuilding the Relationship Between Banks and SMBs – The Post-Pandemic Fallout

The Fintech Times