A Deep Dive Understanding of FairSide Network Ecosystem ($FSD)

Adaora Anders
4 min readJun 22, 2022

The crypto space isn’t only prone to volatile prices, investors also have to be wary of the growing scourge of exploits and rug pulls. Asset security is something every investor must consider to avoid unpleasant circumstances. Insurance coverages offer an opportunity for users to mitigate the risks of exposure to protocols and dapps susceptible to exploits, rug pulls, and other challenges.

While insurance coverages exist, most have their priorities wrong. Deviations from consumer safety in the volatile crypto space have become a norm among these vendors. Of course, this isn’t healthy. If DeFi is to survive, then asset safety has to be given preference and priority, which is something FairSide Network Ecosystem appears to have a hang on.

What Is FairSide Network Ecosystem?

This is an ecosystem that uses a cost-sharing approach to protect users from unforeseen risk situations. Fairside claims to bring the diversification of traditional insurance in a decentralized funnel. To leverage this cost-sharing opportunity, you need to pay a membership fee.

How It Works

FairSide Ecosystem practices risk spreading, which reduces the fallout linked to exposure to multiple crypto events. This way, members are properly safeguarded regardless of the situation.

Anyone looking to get such cover needs to become a member of the FairSide DAO. Interested persons don’t have to worry about restrictions as the ecosystem is rather open.

In FairSide, members have their exposure to loss events covered through a dedicated fund managed by the DAO. The ecosystem indulges in the tenets of decentralization as the community gets to vote on what events meet the criteria of losses to be covered. Validated events will see the disbursement of funds to affected members. Unlike the average insurance vendor that uses smart contracts to decide what event is worthy of coverage, FairSide will be allowing humanity play a role through the consensus voting approach.

FairSide’s opting for the cost-sharing approach might not be everyone’s cup of tea, but its flexibility makes it an easy choice. It provides coverage to all sorts of threats, even those yet unknown. This explains the input of the community in deciding what threats get coverage, ensuring the ecosystem is as sensitive to the needs of members as it should be. Cost-sharing also provides more perks to members of the FarSide ecosystem in more coverage packages and governance participation.

What Is FSD?

FairSide Ecosystem has its native token, FSD token. Members can purchase the token through the FairSide website through a decentralized exchange with an automated market maker.

Owning FSD token gives a holder access to governance rights and consensus voting. This makes the FSD an important piece in the FairSide puzzle.

Getting the FSD tokens is possible through staked contributions. This also attracts all other rewards to encourage more of the same. Away from the usual practice, staking isn’t locked, so you can easily unstake whenever.

The Risk Of Impermanent Staking Loss

Contributing to the FairSide ecosystem is done through staking. This does come with some risk of impermanent staking loss. The upside is that FSD accrued from staking can be utilized in voting and other activities available in the ecosystem.

Network staking on FairSide comes with the risk of impermanent loss. Whenever you contribute an asset to earn FSD, you risk a drop in the value of the underlying asset. Despite the risk, the quantity of FSD tokens received doesn’t change.

While an impermanent loss is a challenge, contributions help the FairSide ecosystem stay solvent. This provides succor to members affected by unforeseen event losses since claims are redeemed through the network’s fund.

FairSide uses a capital pool for issuing rewards to contributors. With many selling off the FSD to recoup their initial stake, the price of the network’s native token drops. This is supposed to encourage more contributors to stake more assets since the price of the LP pairs (FSD) is low. Of course, this doesn’t always pan out this way since investors decide what’s best for them.

How The Cost-Sharing Benefit Works

FairSide uses a cost-sharing approach to provide cover for members in the event of an unforeseen loss. This approach starts with the member submitting a request for a claim, which involves paying an assessor’s bounty using FSD. Fortunately, the bounty is only about 10% of the member’s fee (max).

The payment of the bounty ensures voters are incentivized since 50% of the bounty is distributed among them. FSD price also gets a boost since this bounty is paid through using FSD.

Voters proceed to decide if the loss can be covered by the ecosystem. This makes it superior to having smart contracts decide everything since codes can be rigid.


The FairSide ecosystem brings a human side to insurance coverage. Combining consensus voting with issuance claims management is a good move as it allows members to make the hard decisions, not some obscure smart contract developer.

For more information about FairSideNetwork, visit their websites below:

Website: https://fairside.io/

Whitepaper: https://fairside-network.gitbook.io/fairside-network/whitepaper/gearing-factor

Telegram: https://t.me/FairSideNetwork

Twitter: https://twitter.com/fairsidenetwork