Tokenized Risk

Definition ∞ Tokenized risk involves representing a specific financial or operational risk as a digital token on a blockchain. These tokens can then be traded, managed, or used in smart contracts to facilitate new forms of risk transfer and mitigation. It allows for granular and programmable exposure to various forms of uncertainty.
Context ∞ Tokenized risk is an emerging concept frequently covered in decentralized finance (DeFi) news, particularly in the context of insurance protocols, credit default swaps, or structured financial products. Reports may highlight new platforms that allow users to buy or sell tokens representing exposure to smart contract hacks, stablecoin de-pegging, or loan defaults. This innovation offers new avenues for managing and distributing risk within digital asset markets.