Decentralized Insurance Alternatives: Market Landscape, Opportunities and Challenges





The DeFi ecosystem has been expanding rapidly in the past few years, growing from less than USD $1 billion in 2020 to USD $61.6 billion as of June 2022 as measured by Total Value Locked (TVL), the amount of crypto asset deposited in the DeFi protocols.

With continuous innovation in product design and delivery, the potential of DeFi adoption is massive. However, the rise of DeFi is marred by security issues. Nearly 200 blockchain hacking incidents have taken place in 2021 with approximately USD $7 billion in stolen funds (Cointelegraph, 2021). These hacking events have a wide range of causes including, but not limited to, the following:

  • Smart contract vulnerabilities exploited by hackers to steal funds
  • Manipulation of oracles to cause price feed deviation
  • Attack on governance where a small group of individuals took over the protocol’s governance decisionmaking mechanism


Alvin Kwock

Erik Lie, FSA, CERA
Hailstone Labs

Gwen Weng, FSA, CERA, FCIA
Hailstone Labs

Rex Zhang, ASA

Publication Date: Sept 2022

Publication Site: Society of Actuaries