Why DeFi Insurance Needs to Up its Game, Fast : defi

Why DeFi Insurance Needs to Up its Game, Fast : defi

Cryptocurrency has delivered incredible returns for numerous investors in recent years, however, it is not without risks. While technological advancements are making increasingly rare the types of hacks and exploits that colored the early days of crypto trading (Mount Gox’s still unrecovered $45 billion loss a case in point) these incidents do still happen.

The explosion of decentralized finance (DeFi) has also given rise to a plethora of new risks in the cryptocurrency space. The highest-profile among these are flash loan hacks, as the advent of multi-million dollar, virtually permission-less loans have combined with early-stage and vulnerable decentralized protocols to create a perfect environment for nimble hackers.

In addition to the risks specific to a cryptocurrency or smart-contract-based platform, there are also the common risks faced by any organization: financial failure, bankruptcy, and fraud, among others. Unlike traditional enterprises, however, cryptocurrency companies have little or no access to the type of traditional insurance products that ordinarily provide the cover needed to protect businesses and their customers.

Continue reading: https://yieldapp.medium.com/why-defi-insurance-needs-to-up-its-game-fast-386451e6ee77

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