In order to be eligible for crypto and DEFI insurance policies, investors must meet certain criteria set forth by the insurer (e.g., having a minimum amount invested). Investors can benefit from peace of mind knowing that their funds are protected should a crypto-asset's price suddenly drop dramatically due to unforeseen circumstances beyond their control. Insurance policies also help protect investors against market volatility as well as any potential legal issues that arise during cryptocurrency transactions. Some insurers offer specialized coverage for theft or fraud related to blockchain-based applications or smart contracts deployed on decentralized protocols like Ethereum and EOS. Policies may also cover funds lost during an ICO or token sale event. Generally speaking, they cover losses caused by online attacks or mistakes made on an exchange platform.
This allows the insurer to spread out the risk among multiple parties, making it less likely that any one investor will suffer a major loss.Ĭrypto and DeFi policies differ in their coverage levels and eligibility requirements. Crypto and DeFi insurance works by pooling funds from a variety of investors into a single policy. These policies protect investors from financial losses due to hacker attacks, exchange failures, or other security breaches. Crypto and DeFi insurance are innovative new products that provide financial protection and management of digital assets, such as cryptocurrencies.
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