DefineDeFiWeb3 Glossary

Decentralized Insurance

Crypto-native protection against hacks, bugs, or failures - without a traditional insurance company. Community members share the risk.

Example

Buying Nexus Mutual coverage to protect your funds deposited in Aave, with premiums going to other community members.

Related Terms

Tools & Protocols

⚙️How It Works

  1. 1

    Buy Coverage

    Pay premium to protect your DeFi positions

  2. 2

    Claim Filed

    If hack/bug occurs, submit a claim

  3. 3

    Assessment

    Community or assessors evaluate the claim

  4. 4

    Payout

    If approved, receive compensation

⚠️Risks & Warnings

  • •Coverage may not pay out for all types of losses
  • •Claims are subject to community voting which may reject
  • •The insurance protocol itself could be hacked
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