Ozone is a decentralized insurance mechanism that provides coverage in the event of technical failures on the Terra DeFi ecosystem. The latter is a dual-token platform that features its governance token LUNA and stablecoin Terra USD (UST), which has an exchange rate of 1:1 with the United States dollar. UST has no underlying USD reserves backing it. Instead, it's collateralized via an algorithm by LUNA, and users can earn rewards by using LUNA to fix UST's exchange rate. The network has gained significant momentum in terms of total value locked.
Using Ozone, insurers who deposit UST can receive coverage when smart contracts do not execute properly on the Terra network — such as when users cannot withdraw their money from UST savings accounts in the Terra Anchor Protocol. Similarly, Risk Harbor operates an Ethereum DeFi hub that enables coin holders to cover their DeFi assets for an upfront premium. Meanwhile, other users act as underwriters that deposit their at-risk capital in various insurance collateral pools to earn rewards.
Do Kwon, co-founder and CEO of Terraform Labs, had the following to say regarding the development:
Ozone is currently undergoing an audit from blockchain security firms such as Oak Security and Certik. Pending the results of a Terra community governance vote, Ozone will be transferred to Risk Harbor's developers for maintenance and management.