On-Chain Cover

Definition ∞ On-chain cover refers to a type of insurance or protection mechanism recorded and executed directly on a blockchain. These systems use smart contracts to automate claims processing and payout based on predefined conditions. It provides verifiable and transparent risk mitigation for digital assets and decentralized finance protocols.
Context ∞ On-chain cover is a growing area in decentralized finance (DeFi) news, particularly as users seek to mitigate risks associated with smart contract vulnerabilities, stablecoin de-pegging, or oracle failures. Reports often highlight new protocols offering such protection, examining their solvency models and the effectiveness of their automated claims processes. Its development is critical for increasing confidence and stability within the DeFi ecosystem.