A Risk Classification Framework for Decentralized Finance Protocols

Link: https://www.soa.org/resources/research-reports/2022/decentralized-finance-protocols/

Report: https://www.soa.org/4a61da/globalassets/assets/files/resources/research-report/2022/decentralized-finance-protocols.pdf

Graphic:

Excerpt:

Decentralized finance (DeFi) is an emerging and rapidly growing financial ecosystem with the defining feature that it is powered by blockchain technology. The focus of this paper is on risks for DeFi protocols that could lead to economic losses that could be insurable. This framework was designed around the risks associated with the existing and emerging DeFi protocols.

Author(s):

Tara Chang
OneDegree

Joe Ho
Hailstone Labs

Zachary Tirrell, FSA, FIAA

Gwen Weng, FSA, CERA, FCIA
Hailstone Labs

Jo You
OneDegree

Publication Date: October 2022

Publication Site: Society of Actuaries