Cover Protocol Launches Credit Default Swaps
Cover Protocol has introduced Credit Default Swaps (CDS), a new DeFi coverage product that will expand the smart contract coverage offering already available through Cover.
"CDS is the first in a series of coverage products that we will provide to support DeFi's future ecosystem that includes loans with insufficient collateral," the announcement reads.
The Credit Default Swap is a financial instrument that Michael Berry used in 2007 to reduce the mortgage debt made famous by the movie "The Big Short." Essentially, a CDS is a contract that entitles the holder to a payment if the debtor is unable to repay the loan within the established rules of the loan extended.
Ruler Protocol will be one of the first recipients of this service with the introduction of the credit default swap market for its lenders.
