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
Risk Score Breakdown
InsurAce's highest risk area is Vitality Risk (8/10). Here's how each dimension contributes to the overall 33/100 score:
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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