DeFi assets with insurance coverage below 2% of 100 billion dollars

Less than 2% of the DeFi market's total value locked, approximately 100 billion dollars, is protected by insurance-like coverage. Firelight Chief Strategy Officer Conor Sullivan highlighted that the main issue in DeFi insurance is not just the lack of coverage but the absence of verifiable insurance. Traditional insurance often fails to disclose policy limits, terms, premiums, or backing capital, complicating users' ability to assess the reliability of protection. Sullivan noted that the on-chain market poses unique challenges for traditional insurance models due to rapidly changing risks such as smart contract vulnerabilities, oracle manipulation, and failures in key and signature management across interconnected protocols. In response, on-chain insurance is emerging as an alternative, allowing for real-time verification of collateral and coverage terms on the blockchain. Firelight and other entities are developing verifiable insurance infrastructure for integration into DeFi protocols.