Sherlock
Moderate risk — novel audit-plus-insurance model, but the pool is under-collateralized by design and audit failures directly threaten solvency
Top Risks
1
Under-collateralized insurance model: staking pool reserves ($60M) can be overwhelmed by correlated exploit events across multiple covered protocols, forcing staker principal slashing
2
Skin-in-the-game model creates perverse incentives: Sherlock only covers protocols it audits, so systematic audit methodology failures cascade to insurance solvency
3
Coverage caps ($10M per protocol) are inadequate for large DeFi protocols, creating moral hazard where Sherlock insures 5% of risk but collects 2% premium on 100% of TVL
Risk Breakdown
Frequently Asked Questions
Is Sherlock safe to use?
Sherlock receives a B- risk grade (35/100) from Hindenrank, where lower scores indicate lower risk. Moderate risk — novel audit-plus-insurance model, but the pool is under-collateralized by design and audit failures directly threaten solvency A DeFi insurance protocol that audits smart contracts and then insures them against hacks, with $60M in its claims pool. You can deposit USDC to back those insurance policies and earn yield from premiums. Its B- grade reflects a fundamental tension: if Sherlock's audits miss bugs, it also has to pay for the losses.
What are the main risks of using Sherlock?
The key risks identified for Sherlock are: (1) The $60M insurance pool covers far more than $60M in total risk. If multiple insured projects get hacked at the same time, the pool cannot pay everyone. Your USDC deposit gets slashed to cover claims (2) Sherlock only insures projects it audits. If its audit process has a blind spot, every insured project shares that same weakness (3) Insurance payouts max out at $10M per project. A $500M protocol paying premiums gets only $10M back if hacked
What is Sherlock's risk score breakdown?
Sherlock scores 35/100 across eight risk dimensions: Mechanism Novelty: 8/15, Interaction Severity: 10/20, Oracle Surface: 0/10, Documentation Gaps: 3/10, Track Record: 5/15, Scale Exposure: 3/10, Regulatory Risk: 3/10, Vitality Risk: 3/10. The highest risk area is Mechanism Novelty at 8/15.
How does Sherlock compare to other DeFi protocols?
Among 68 rated DeFi protocols on Hindenrank, Sherlock ranks #33 by safety (lowest risk score = safest). Its 35/100 risk score and B- grade place it in the middle tier of DeFi protocols.
Has Sherlock ever been hacked or exploited?
Sherlock scores 5/15 on the Track Record risk dimension, indicating some history of security incidents or exploits. Higher scores reflect more severe or frequent incidents. Review the full risk report for details.
Last scanned 2026-02-12