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  • Pascal Hügli

Research Paper: DeFi meets the Re-insurance Market

About this Research Paper

DeFi is revolutionizing finance by bringing it onto the blockchain, offering transparency, efficiency, and cost savings. After its explosive growth in 2020, the initial hype phase died down as high yields of a circular DeFi token economy detached from the real world could not be sustained.

This prompted a shift towards real-world assets (RWAs), whose adoption could bring more sustainable yield to the on-chain DeFi world. But not only that. RWAs, especially in the form of tokenized insurance-linked securities, can play a crucial role in pushing the adoption of tokenization by offering lucrative financial incentives. These incentives are particularly present and enticing in the reinsurance industry, which currently is in a hard market environment with reinsurers looking for new capacity in the capital markets, presenting investors, especially digital asset investors, with high, uncorrelated yields from the real world.

As a result, RWAs can be a gamer changer for broader crypto adoption by professional investors. Whereas DeFi and stablecoin investors get new sources of uncorrelated yields to diversify their crypto asset portfolios, traditional reinsurers companies will benefit by tapping into the ready-to-be-deployed capital from digital asset investors.

Serving as a bridge between these two market players are companies like Cerchia. The project offers a platform for direct risk transfer between capital markets and protection seekers. By making such win-win opportunities possible, RWA ecosystem projects like Cerchia are fostering the integration and growth of DeFi and TradFi.

Table of Contents

  1. DeFi Enters Traditional Capital and Debt Markets

  2. Section 1: Overview of Real-world Assets (RWAs)

  3. Section 2: Re-insurance and DeFi investors – a match made in heaven

  4. Section 3: RWA ecosystem and its players

Read the Research Paper here:

Download PDF • 8.45MB


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