Bridge insurance is a product by LI.FI and InsurAce insures the transactions going through LI.FI for a small premium (fee).

After listening to many of our clients' concerns about the safety of bridges, the insurance product became an obvious feature for us as it addresses the risks associated with using bridges by providing 100% protection for users' funds.

Currently, Bridge Insurance is live on jumper.exchange and has received excellent traction with over 5,000 transactions worth $900k+ covered across 14 blockchains.

The demand for this feature has encouraged us to roll out this offering to all our clients. Here's everything you need to know about Bridge Insurance:

Risks Covered

Here’s the full cover document.

In a nutshell, here are the scenarios that are covered:

1. The user receives an amount less than the toMinAmount quoted by LI.FI. The difference will be reimbursed by the insurance.
2. The user does not receive any amount due to an underlying bridge hack. During the flight of the transactions (2-10 mins), if the underlying bridge gets hacked and cannot recoup the lost funds, the user will receive the full cover amount.

Risk Evaluation

At LI.FI, we adhere to rigorous standards for assessing bridges integrated into our protocol. Nevertheless, despite our comprehensive evaluation process that prioritizes security, there is still a possibility that some bridges may be compromised due to unforeseen factors, including but not limited to smart contract bugs and misaligned economic incentives.

Furthermore, it is noteworthy that bridges possess distinct designs that entail varying security characteristics and risks, leading to differing risk premiums.

The valuation of the risk premium for bridges is contingent upon a range of factors, including but not limited to:

1. Independent audits conducted by reputable auditing firms
2. An assessment of the bridge's architecture, design, and implementation based on the Crosschain Risk Framework developed by LI.FI and ConsenSys researchers
3. The team's experience and qualifications in the bridging industry
4. The backing provided by investors for the bridge
5. The historical performance of the bridge

Currently, the premium fees range from 10-30bps.