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Lookup NU author(s): Dr Ying ZhangORCiD
This work is licensed under a Creative Commons Attribution 4.0 International License (CC BY 4.0).
This paper empirically explores the early development of insurance projects in the decentralised finance (DeFi) industry, which is based on disruptive technologies like blockchain and smart contracts. A brief history of DeFi is narrated, stressing four risks of DeFi (volatility risk, cyberattack risk, liquidity risk, and regulation risk) and its co-evolution with traditional finance. Then, first-hand evidence is collected from informed industrial practitioners by two semi-structured focus group discussions. Consensuses are reached on why the DeFi insurance market is underdeveloped and incomplete (the liquidity conundrum, the actuarial conundrum, the verification conundrum, the scale conundrum, the yield conundrum, the exploitation conundrum, the cybersecurity conundrum, and the regulation conundrum) and how the next generation of DeFi insurance can address these conundrums. Further evidence is obtained to quantify the importance of conundrums using the Analytic Hierarchy Process (AHP). Building on the qualitative and quantitative findings, a prototypical model of DeFi insurance is proposed.
Author(s): Zhou P, Zhang Y
Publication type: Article
Publication status: Published
Journal: International Journal of Finance & Economics
Year: 2025
Pages: epub ahead of print
Online publication date: 26/03/2025
Acceptance date: 19/02/2025
Date deposited: 04/11/2025
ISSN (print): 1076-9307
ISSN (electronic): 1099-1158
Publisher: John Wiley & Sons Ltd.
URL: https://doi.org/10.1002/ijfe.3154
DOI: 10.1002/ijfe.3154
Data Access Statement: The data that support the findings of this study are available on request from the corresponding author. The data are not publicly available due to privacy or ethical restrictions.
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