How Does Re Work?

Re connects DeFi capital with traditional reinsurance markets, allowing on-chain depositors to provide reinsurance capacity to licensed insurers via treaty placements and binder arrangements

On-chain reinsurance capital pooling is a first-of-its-kind mechanism bridging $600B+ traditional reinsurance market with DeFi. Novel but introduces complex regulatory and actuarial risks.

Re collects premiums from partner insurers ($191M+ written premiums in 2025) and distributes yields to on-chain capital providers, targeting a 92% combined ratio

On-chain premium distribution from off-chain insurance contracts creates a novel yield mechanism uncorrelated with crypto markets. Combined ratio of 92% indicates profitable underwriting.

USDRE is a stable token issued to depositors in exchange for USDC within the insurance capital layer, representing their share of the reinsurance capital pool

Receipt token mechanism is standard. USDRE's value depends on the underlying reinsurance pool performance — catastrophic losses could impair its peg.

ReToken is an ERC20 governance token used for voting on capital deployment decisions, partner onboarding, and protocol parameters

Standard governance token. Capital deployment decisions via governance create meaningful real-world consequences as they affect reinsurance capacity allocation.

Chainlink Proof of Reserve integration provides transparent verification of on-chain capital reserves backing reinsurance commitments

Standard Chainlink PoR implementation. Important for transparency but only verifies on-chain reserves, not off-chain premium collection or claims status.

Re underwrites across multiple insurance lines including commercial auto, property, and workers' compensation, diversifying risk exposure across uncorrelated insurance categories

Multi-line reinsurance diversification on-chain is novel. Diversification reduces concentration risk but requires actuarial expertise that may be difficult to govern via token voting.

Re is deployed across Avalanche, Base, Arbitrum, and Ethereum, distributing capital access across multiple chains

Multi-chain deployment follows standard patterns but increases smart contract attack surface. Each deployment must maintain consistent reserve verification.

A major natural disaster or catastrophic event could trigger simultaneous claims across multiple insurance lines. On-chain capital pool may be insufficient to cover concentrated losses, causing USDRE impairment and depositor losses. Traditional reinsurance has retrocession layers; Re's on-chain pool is more concentrated.

Hacken audit identified centralized minting to a single address. If the minting authority is compromised through key theft or insider action, unlimited token minting could drain protocol value by diluting existing holders or swapping minted tokens for deposited capital.

Premium yields depend on off-chain insurer partners making timely payments. Insurer defaults, disputes over coverage terms, or delayed premium payments create cash flow uncertainty for on-chain depositors who expect predictable yields.

Deployment across four chains creates fragmented capital that must maintain consistent reserve ratios. A bridge exploit or chain-specific issue could create temporary reserve imbalances, where one chain's pool is undercollateralized while another has excess reserves.

Token governance directing reinsurance capital allocation requires actuarial expertise that token holders may lack. Poor capital allocation decisions could expose the pool to underpriced risk, where premiums collected are insufficient to cover eventual claims.