On Chain Risk Cover

Definition ∞ On Chain Risk Cover refers to decentralized insurance or protection mechanisms built directly on a blockchain to mitigate specific risks associated with digital assets or DeFi protocols. These covers often protect against smart contract exploits, oracle failures, or stablecoin depegging events. They operate transparently through smart contracts and collective capital pools.
Context ∞ The concept of on-chain risk cover is gaining traction as the DeFi ecosystem matures, providing a native solution for managing protocol-specific risks. News often highlights new decentralized insurance offerings and the increasing capital allocated to these risk pools. This development represents a significant step towards building more resilient and secure decentralized financial systems.