NFTs, or non-fungible tokens, have taken the digital world by storm, providing users with a new and exciting way to buy, sell, and trade unique digital assets. However, the new and innovative technology is not without its challenges, particularly when it comes to security. NFTs are stored on blockchain networks, which are generally considered secure, but hacks and other vulnerabilities have resulted in the loss of millions of dollars in digital assets. This has led to the development of a new solution: NFT warranties.
Web3 payment provider Wert and insurtech service Avata have teamed up to create a new NFT warranty service, which aims to provide a sense of security and trust to collectors of digital assets. The warranty will cover up to 90% of the value of any NFTs compromised in a smart contract hack, providing protection to both active and prospective collectors.
The NFT warranty service will be available on nearly 80 digital asset marketplaces, including the KnownOrigin NFT marketplace. The protection will be charged at 6% of the asset cost at checkout, and coverage will be calculated by the purchase price rather than the current market value. According to George Basiladze, the co-founder and CEO of Wert, the warranties will encourage more non-native crypto users to join the Web3 space with minimal risk.
The NFT warranty service is a significant development in the NFT space, as it addresses one of the major concerns of collectors: the security of their digital assets. By providing a degree of protection against hacks and theft, the service could help to perpetuate the mass adoption of NFTs and Web3 technologies. This is particularly important given the increasing popularity of NFTs, with some studies projecting that NFT-related global transactions will skyrocket from 24 million in 2022 to nearly 40 million by 2027.
NFT warranties can also make the industry more open to professional collectors and investors. High-value NFTs, similar to traditional collectibles and art, are often bought by serious investors who are more concerned about security than the average collector. The availability of warranties could make it easier for such investors to participate in the NFT market.
here are a few examples of how an NFT warranty could work:
Opt-In NFT Warranty: An NFT marketplace or payment provider could offer opt-in warranty service for NFT collectors. This warranty could cover up to a certain percentage of the value of the digital assets for any NFTs compromised in a smart contract hack. The collectors who opt for this service would have to pay a fee at checkout, which could be a percentage of the asset cost.
Decentralized NFT Insurance: Another way to offer NFT warranties is through decentralized insurance. Smart contracts could be used to create insurance pools in which NFT collectors could participate. The pools would be governed by the participants, and payouts could be made automatically based on the terms of the smart contract.
NFT Authentication and Verification: NFT warranties could also be offered as part of an NFT authentication and verification service. In this case, the service would authenticate and verify the ownership of the NFT and offer a warranty for the digital asset.
Overall, the goal of an NFT warranty is to provide collectors with a sense of security and trust, which could encourage more non-native crypto users to join the Web3 space with minimal risk. By offering this type of protection, the NFT industry could become more appealing to a broader audience, including professional collectors and investors.
NFT warranties can help bring about the mass adoption of the technology by providing a sense of security and trust to collectors of digital assets. The new NFT warranty service from Wert and Avata is an important development in the NFT space, as it addresses one of the major concerns of collectors: the security of their digital assets. With the increasing popularity of NFTs, the availability of warranties could make the industry more open to professional collectors and investors, helping to perpetuate the mass adoption of NFTs and Web3 technologies.