What is DeFi insurance?
DeFi insurance (or DeFi cover) is a decentralised insurance product that pays out if a covered protocol is hacked or exploits occur. It works like traditional insurance but is governed by smart contracts and community claims assessment.
Major DeFi insurance providers
- Nexus Mutual — the largest DeFi insurer, community-governed
- InsurAce — multi-chain coverage
- Unslashed Finance — institutional-grade DeFi cover
- Sherlock — smart contract audit + insurance combined
What DeFi insurance covers
- Smart contract exploits
- Oracle manipulation attacks
- Protocol governance attacks
- Stablecoin depegging (some policies)
What it doesn't cover
- Rug pulls (often excluded)
- User error (sending to wrong address)
- Market losses
- Regulatory action
Cost of DeFi insurance
Coverage typically costs 1%–5% of the covered amount per year, depending on the protocol's risk profile. For a $10,000 deposit, insurance might cost $100–$500/year.
Is DeFi insurance worth it?
For large deposits, insurance can provide peace of mind. For protocols with strong security (audited, renounced, locked liquidity), the risk being insured against is already low — making insurance optional rather than essential.