The Web3 space has seen its fair share of exploits in the recent past with more than $320 million exploited by hackers in the first quarter of 2023 alone. For many users, particularly prospective users, having security for digital assets is a top priority.
A new nonfungible token (NFTs) warranty service from Web3 payment provider Wert and InsurTech service Avata is trying to troubleshoot the gap in asset security for collectors both active and prospective.
According to the announcement the opt-in warranty for NFTs will cover up to 90% of the value of the digital assets for any NFTs that are compromised at the hands of a smart contract hack.
Cointelegraph spoke with George Basiladze, the co-founder and CEO of Wert, who said a solution like this helps bridge the “trust” gap, while offering needed protection to an array of collectors.
“[NFT warranties] will provide a sense of security and trust, which will encourage more non-native crypto users to join the Web3 space with minimal risk, making it more appealing to a broader audience.”
The service will be available on nearly 80 digital asset marketplaces including the KnownOrigin NFT marketplace. According to Basiladze, the NFT 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.
Basiladze believes that offering a service that ensures some degree of protection against hacks and theft will help perpetuate mass adoption of NFTs and Web3 technologies in general.
“Overall, any consumer looking to get into the NFT space wants to protect their money invested and by offering them that sense of security, they are able to engage in Web3 on a deeper level with reduced risk.”
He pointed out that particularly high-value NFTs, similar to traditional collectibles and art, are often bought by serious investors who are more often worried about security than the average collector. Warranties have the ability to make the industry “more open to professional collectors and investors.”
A recent study from CoinGecko revealed that 25% of NFT owners have a collection of 51 digital assets or more. Some studies have projected that NFT-related global transactions will skyrocket from 24 million (2022) to nearly 40 million by 2027.