Guides

Decentralized finance (DeFi) has reshaped financial services, enabling users to trade, lend, borrow, and earn yield without intermediaries. But this openness comes with high risks. Smart contract failures, governance exploits, and hacks often result in irreversible losses. Unlike traditional finance, which relies on regulations and insurance for protection, DeFi operates in an unregulated space where users bear the full impact of security breaches. To counter these risks, decentralized insurance has emerged, offering coverage for smart contract vulnerabilities, stablecoin depegging, and liquidity crises. But how reliable is it? Can it truly protect users? And does it have the scalability to keep up with DeFi’s rapid growth? How DeFi Insurance Operates Unlike traditional insurance, DeFi insurance is built on decentralized protocols and managed through smart contracts. Instead of relying on centralized insurers to handle claims, it pools funds from users who provide liquidity. When ...