This idea revolves around the mechanism where a significant capital allocator would offer an insurance-like service, providing users with exit support during periods of high congestion or exorbitant transaction fees. These scenarios are particularly relevant for users involved with "bitcoin banks" or similar platforms, where the costs and delays of executing transactions can become prohibitive due to network issues.

This service aims to mitigate one of the key risks associated with blockchain transactions, especially on networks that are prone to congestion. By ensuring that users can exit their positions even during peak times, without incurring unsustainable costs, L1 insurance could enhance the overall liquidity and user confidence in the blockchain ecosystem. It addresses a critical pain point for average users who might otherwise be unable to move their assets due to the financial barriers imposed by high transaction fees.

Moreover, the development of such a market could lead to increased stability within the blockchain space. As more users feel secure in their ability to transact efficiently regardless of network conditions, the demand for L1 insurance services may grow. This, in turn, could foster a healthier, more liquid market environment, encouraging further adoption and investment in blockchain technology and cryptocurrencies.