- InsurAce CMO says there is huge market potential in DeFi insurance, says Cointelegraph.
- After a rocky couple of months, DeFi insurance is needed now more than ever.
- $2 billion has been lost in DeFi just this year alone.
Dan Thomson, CEO of the decentralized cover protocol InsurAce, says that there is huge potential for cryptocurrency insurance providers. Thomson pointed out huge events such as the LUNA crash as examples of the potential.
Speaking to credible sources, Thomson pointed out that there is a big imbalance between the Total Value Locked (TVL) in crypto and decentralized finance (DeFi) protocols and the proportion of that TVL that is covered by insurance. There exists a tremendous market potential for crypto insurance providers. This is due to the fact that over $2 billion has been lost in decentralized finance this year.
Thomson said:
DeFi insurance is a sleeping giant. With less than 1% of all crypto covered and less than 3% of DeFi, there’s a huge market opportunity still to be realized.
He continued by saying that he does not think the major conventional insurance firms would create their own native applications for the market, but that he does believe they will choose to provide a form of reinsurance as a method of acquiring exposure.
When it comes to establishing a solid foundation for the widespread implementation of decentralized finance, insurance models are among the most crucial components that must be included. Although developing insurance mechanisms for the decentralized finance sector is theoretically simple, the actual implementation of these mechanisms is very difficult and does not entirely correlate with what is seen in conventional capital markets.
Major disruptions in the previous few months have shaken confidence in the DeFi market’s potential. Insurance is needed to mitigate risk and restore DeFi’s credibility among institutional and individual investors.
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