Insurance coverage active
A operational history factor in the v1.7.0 rubric. Measured per protocol on a e cadence.
Methodology how we score #
**What this measures** This factor records whether the protocol has active coverage on a recognized DeFi insurance provider (Nexus Mutual, Unslashed Finance, Sherlock, or a verified equivalent) and, if so, the current cover size in USD. Coverage is verified via provider APIs and is updated continuously. A protocol without any active insurance coverage scores yellow or red depending on TVL tier. The factor measures the presence and adequacy of formal insurance coverage, not informal treasury reserves.
**Why it matters** Active insurance coverage provides two depositor-protection signals. First, it represents an independent third-party assessment of the protocol's risk posture: insurance providers (particularly Sherlock, which runs competitive audit contests) conduct their own review before offering coverage and reprice based on ongoing assessments. Second, it provides actual financial recourse for depositors in the event of an exploit. In the dataset, Euler Finance's $4.5M Sherlock insurance payout acknowledging the missed donateToReserves vulnerability is the clearest example of insurance functioning as designed. Coverage absence correlates with the dataset's highest-loss protocols: the majority of protocols with losses exceeding $50M had no active insurance coverage at the time of the exploit.
**Green / Yellow / Red** Green: active coverage from a recognized provider with cover size representing at least twenty percent of current TVL. Yellow: active coverage but cover size represents less than twenty percent of TVL, or coverage is from a provider without an active assessment process. Red: no active insurance coverage on any recognized provider, or coverage lapsed within the last ninety days.
**Common gray cases** Self-insurance (e.g., protocol treasury reserves earmarked for hack compensation) is not equivalent to third-party insurance coverage and is not counted for this factor. Curator must verify that the coverage is active via direct API check, not just protocol documentation, as policies can lapse silently.
**Notable historical examples** No cross-hacked incidents currently linked in database for this factor.
Measurement what to look for #
Determine whether active coverage on Nexus Mutual, Unslashed, Sherlock, or equivalent is in force; record cover size in USD.