Crypto insurance a sleeping giant with only 1% of investments covered

While on-chain insurance has been around since 2017, only a measly 1% of all crypto investments are actually covered by insurance, meaning the industry remains a sleeping giant, according to a crypto insurance executive.

Speaking to Cointelegraph, Dan Thomson, the CMO of decentralized cover protocol InsurAce said there is a massive disparity between the total value locked (TVL) in crypto and decentralized finance (DeFi) protocols and the percentage of that TVL with insurance coverage:

DeFi insurance is a sleeping giant. With less than 1% of all crypto covered and less than 3% of DeFi, theres a huge market opportunity still to be realized.

Though plenty of investment has poured into smart contract security audits, on-chain insurance serves as a viable solution for digital asset protection such as when a smart contract is exploited or the frontend of a Web3 protocol is compromised.

The collapse of Terra (LUNA) and the resulting depeg of Terra USD provides a textbook example of how on-chain insurance can protect investors, notes Thompson, adding that InsurAce paid out $11.7 million to 155 affected UST victims.