The Rise of DeFi Insurance Surpasses Expectations
Upon establishing itself, Decentralized Finance has become the primary space for creative minds to develop revolutionary projects that possess the potential to change the finance world as we know it. Perhaps the best aspect of DeFi is its decentralized nature, allowing new concepts to flourish and turn into exciting, solid projects. This is mostly thanks to the communities forming around and supporting DeFi projects. Unlike TradFi, users are much more than being customers, instead, they are the driving force of DeFi as they play a key part in all processes of DeFi project developments from funding to decision making.
As with all venues where money is involved, there are malicious actors within DeFi space as well. There are many methods scammers or hackers use to steal crypto-assets, the most dangerous one being smart contract hacks. Other methods such as phishing and wallet dusting can be avoided with self-education, but there is no way to prevent smart contract bugs from being exploited. This is beyond protocols’ and users’ capabilities.
According to London-based firm Elliptic, the total value lost by Defi exploits in 2021 totaled over $10b. This fact can be intimidating for both new and experienced users, causing promising projects to fail due to a lack of support.
But DeFi is not known for giving up easily…
DeFi insurance is the DeFi’s response to ill-intended actors’ activities. It is based on the idea of compensating for losses suffered due to smart contract hacks and exploits. Although DeFi insurance is not a preventive measure for hacks, it is the best way to repair the damage done to users.
When DeFi insurance protocols were first forming, the blockchain in insurance market size was valued at $64.50 million in 2018 and projected to reach $1,393.8 million by 2023, at a Compound Annual Growth Rate (CAGR) of 84.9%.
The TVL (Total Locked Value) of DeFi insurance protocols stands at $1,093m at the end of Q1, 2022. It is worth remembering that TVL refers to the total amount of money locked in these projects, meaning the market value of DeFi insurance is much higher at the time of writing. The current TVL alone is even higher than the estimated $1,393 million market size that was projected back in 2018.
The rapid growth of DeFi insurance is going in parallel with the growth of the Decentralized Finance space. With the introduction of NFTs and the metaverse, more users are drawn to the DeFi space. Consequently, the amount of money locked in DeFi is rising exponentially, drawing the attention of hackers and scammers along the way. According to Coinbase, DeFi insurance is expected to thrive in 2022 and stand against hacks.
Who knows, perhaps DeFi insurance will exceed these expectations and consolidate its place in DeFi even further. Given the vastness of Decentralized Finance and the fact that 98,13% of all crypto assets are uninsured still, there is still a long way ahead, but the data we have suggests DeFi insurance will prevail over challenges.
One insurance marketplace for all: CoverCompared
Decentralized finance’s mainstream appeal is getting stronger day by day. By changing the financial landscape positively, DeFi offers advantages to the insurance industry as well. The most obvious benefit of DeFi insurance is its accessibility compared to traditional finance. Unlike the traditional insurance industry, DeFi insurance doesn’t involve any intermediaries, significantly lowering costs. As a DeFi insurance marketplace, CoverCompared offers a wide variety of crypto and traditional insurance policies that can be purchased at affordable rates and with zero gas fees levied.
CoverCompared is an insurance aggregator, helping DeFi users find the perfect insurance solution for their unique needs. Any crypto owner, trader, or anyone who uses DeFi protocols for any reason can easily compare and buy insurance using crypto from various providers for their assets.
CoverCompared is the First DeFi insurance marketplace for the global crypto ecosystem. We aim to lower transactional and administrative costs of insurance policies and coverage while providing high-value, cost-effective insurance products bought using a host of cryptocurrencies.
Our platform will be connecting users with multinational insurance providers for all global insurance products such as crypto-related protection, health, life, and travel policies. The platform will include a frictionless insurance marketplace experience that incorporates next-generation blockchain technology and tokenized incentives.