Definition ∞ On-chain insurance refers to decentralized risk management products built directly on blockchain technology. These protocols offer protection against specific events, such as smart contract failures or stablecoin de-pegging, with claims and payouts often executed automatically via smart contracts. This model aims to provide transparent and efficient coverage for digital asset holders.
Context ∞ The development of on-chain insurance is a significant area of innovation within decentralized finance (DeFi), providing a safety net for users interacting with various protocols. Current discussions often focus on the solvency of these insurance protocols and the mechanisms for assessing and processing claims. Future advancements are anticipated in expanding coverage to a broader range of risks and enhancing the automated payout systems.
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