Everyone seems excited about crypto / web3 insurance just as everyone is excited about any area that has white space. Thoughts and thesis below.

• spectrum of insurance - from Defi on the left to centralized on the right

  • decentralized

    • example companies: Nexus Mutual, Unflashed, Nayms

    • Usually protocol level work, insurance by collective investment

      • often seen via smart contracts

    • Pros: good at getting to high limits quickly and at a good price, easier to underwrite, often instant payouts

    • Cons: very niche, hard to do D&O, cyber, etc.

  • centralized

    • example companies: Realm, Sompo, Superscript, Axis, Relm, Coincover

    • bigger ones will write crypto insurance risk in a more traditional way

    • Pros: More extensive diligence and process, increasing internal buy-in and interest

    • Cons: hard to get to high limits due to diligence and data requirements

  • service providers

    • usually doesn't provide cover

    • more for getting insurance industry comfortable

  • May have heard of Breach - more in the middle as they insure crypto on exchanges

• biggest obstacles for crypto insurance / is there appetite?

  • need internal buy-in --> increasing but not there yet

  • huge education aspect in the space

    • ESG fanatics who think bitcoin is ruining our planet

    • bitcoin is a ponzi scheme

  • very little loss history --> hard to underwrite

  • those likely to purchase crypto insurance (businesses) are later stage e.g. chainalysis

    • years ago, crypto insurance was very expensive and less understood

• what to keep in mind when investing in this space

  • few competitive advantages - very few players in general

  • any capacity provider will probably stand out because they're willing to take on crypto risk and figure it out

  • little innovation thus far. market is still small.

  • seeing more insurance people move into the space versus tech-first

  • need API integration / technological user friendly

• longer term view of where the space is going

  • consolidation with other insurtechs and insurance companies like cyber

  • consolidation with other tech companies in blockchain analytics, KYC, AML, etc (chainalysis, Merkle, elliptic)

  • likely there will be price war and margin compression as more enter the space and undercut each other