A report published on March 21 by decentralized finance analytics firm OpenCover indicates that DeFi insurance companies paid out $34.4 million in claims in 2022. Since OpenCover began tracking the data, only $36.9 million in claims have been paid out of this type. Notable payouts include $22.5 million during the May 2022 Terra Luna ecosystem collapse and $4.7 million from the November 2022 FTX cryptocurrency exchange crash.
Despite the increase in payments, OpenCover said that only $231 million in funds in DeFi protocols had been secured according to its data, representing just 0.5% of the total value locked in the DeFi industry. Cointelegraph reported on Jan. 5 that DeFi security exploits increased 47.4% annually in 2022 to $3.64 billion. Global blockchain-related crime, excluding financial crimes, amounted to $13.7 billion during the year, Chinese blockchain security firm LianAn Technology wrote.
DeFi insurance has expanded to eight main categories: protocol loss coverage, stablecoin depreciation coverage, yield token coverage, custodial account coverage, audit coverage (smart contract error), cutoff coverage for professional validators and other personalized coverage. OpenCover said that over the past nine months, the average daily leverage ratio between active policy amount and subscribed capital was 1.07 times across different providers.
“As of this writing, the total value of subscription equity funds tracked by OpenCover stands at $286 million (186k ETH) with a low of $210 million and a high of $394 million over the last 9 months. The current value is 26% lower than the peak period in USD terms.”
Despite the growth of the DeFi insurance industry, OpenCover says more needs to be done regarding the ability to scale. “Ultimately, scaling these innovations to a meaningful size will depend on the robustness of DeFi risk assessment frameworks, of which there are currently very few”wrote the signature.
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the entire amount invested may be lost. The services or products offered are not directed or accessible to investors in Spain.