Is InsurAce Safe?
Risk Grade: B- (33/100)
InsurAce is rated as moderate risk — some novel mechanisms, generally well-understood.
Moderate risk — proven payout track record, but reserves are too thin for a truly catastrophic event
A crypto insurance protocol where you can buy coverage against hacks and stablecoin crashes, or provide capital to earn premiums as an underwriter. It proved the model works by paying out $11.6M in claims after the Terra UST collapse. Its B- grade reflects the fundamental problem that $30M in reserves may not cover a major correlated event.
TVL
$138,000
Mechanisms
6
Interactions
5
Value Grade
D
Key Risks for InsurAce Users
If two or more stablecoins crash at the same time, the $30M insurance pool cannot pay everyone in full. Policyholders would get cents on the dollar.
When big claims hit, capital providers can withdraw their money before losses are locked in, leaving the remaining pool even smaller for everyone else
Insurance premiums may be priced too low for the actual risk. If a major hack exceeds $40M in claims, the protocol simply runs out of money.
Top Risk Factors
- •Correlated depeg events (multiple stablecoins or LSTs depegging simultaneously) can trigger claims exceeding InsurAce's $30M underwriting capital, leading to pro-rata payouts below full coverage
- •Capital provider withdrawals during stress events create a death spiral: claims deplete pools → underwriters panic and exit → remaining claims become unpayable
- •Depeg insurance pricing is inherently difficult; if premiums are set too low relative to true depeg risk, InsurAce operates at a structural loss and cannot sustain payouts
How InsurAce Compares to Peers
InsurAce ranks #25 of 68 DeFi protocols (above-median). At a risk score of 33/100, it's 3 points safer than the sector average of 36/100.
Adjacent peers: Fetch.ai (B-, 32/100) is ranked just safer, and Metronome Synth (B-, 33/100) is ranked just riskier.
See the full DeFi sector leaderboard or the InsurAce vs Metronome Synth comparison.
Common Questions about InsurAce
Plain-English answers based on InsurAce's scores across Hindenrank's 8 risk dimensions. The highest-scoring (riskiest) dimension is Vitality Risk (8/10).
Has InsurAce ever been hacked or exploited?
InsurAce has a fairly clean operational history. The track record dimension scored 2/15, indicating minor or no significant incidents on record. A clean track record is a positive signal but it does not guarantee future safety, especially as protocol complexity grows.
How much money is at stake in InsurAce?
InsurAce currently holds a small TVL — exit liquidity is a real concern at this size. Smaller TVL means individual depositors carry a larger share of any loss event, and it can be harder to exit a position quickly during stress.
What's the worst-case scenario for InsurAce?
Hindenrank has identified specific collapse scenarios for InsurAce. The most prominent: "Correlated Depeg Event Exhausts Underwriting Capital". The trigger condition is Multiple stablecoins or LSTs depeg simultaneously (e.g., USDC + USDT or stETH + rETH), triggering mass insurance claims that exceed InsurAce's underwriting capital. Reading through the full scenario list on the protocol page is the single best way to understand the actual failure modes — generic "smart contract risk" is rarely the thing that takes a protocol down.
Is InsurAce regulated or insured?
InsurAce has low regulatory exposure on Hindenrank's framework (2/10). The protocol is structured in a way that minimizes counterparty and jurisdiction concentration, though regulatory risk in crypto can change rapidly. No DeFi protocol carries FDIC-style insurance — even with low regulatory risk, depositors are not protected in the way bank customers are.
What are the biggest red flags for InsurAce?
Hindenrank's retail-focused risk audit flagged: If two or more stablecoins crash at the same time, the $30M insurance pool cannot pay everyone in full. Policyholders would get cents on the dollar. When big claims hit, capital providers can withdraw their money before losses are locked in, leaving the remaining pool even smaller for everyone else Insurance premiums may be priced too low for the actual risk. If a major hack exceeds $40M in claims, the protocol simply runs out of money.
Should beginners deposit into InsurAce?
InsurAce is rated B-, which is acceptable for users who understand the protocol's mechanism. Beginners should read the full risk breakdown and only deposit after they can articulate the top three failure modes. If you cannot explain how the protocol works, do not deposit.
How does InsurAce compare to safer DeFi alternatives?
InsurAce is one protocol in Hindenrank's DeFi coverage. The safest DeFi protocols on the leaderboard tend to share three traits: a long incident-free track record, conservative mechanism design, and high-quality public documentation. Compare InsurAce against the full DeFi ranking before committing capital.
For the full 8-dimension score breakdown, the radar chart, and dependency graph, see the InsurAce risk report.
Read the Full InsurAce Risk Report
This protocol has 2 collapse scenarios. 2 high-severity interaction risks identified. See the full mechanism classification, interaction matrix, and deep-dive recommendations.
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