[Narrator]

Hello everyone, welcome back to the TokenMinds Training series.
Today we’ll look at how DeFi insurance platforms are built and integrated into existing crypto systems, so risks can be managed automatically instead of manually.

This session explains how to design and build a DeFi insurance platform that works in real production.
It also shows how insurance can reduce losses, rebuild user trust, and support long-term growth for crypto products.

DeFi insurance protects users and protocols when something goes wrong on-chain, such as hacks, smart contract bugs, or bridge failures.
Smart contracts collect premiums, hold funds openly on-chain, and pay claims automatically when clear rules are met.
This matters because losses happen fast in DeFi and usually cannot be reversed, so protection must also act fast.

Building insurance inside the protocol gives full control over risk rules, capital usage, and claims logic.
The insurance logic is closely matched to how the protocol actually works on-chain, instead of using generic third-party coverage.
Claims follow fixed rules and execute automatically, which makes outcomes predictable and transparent.

When a user deposits funds, insurance turns on automatically and a small fee flows into a protection fund.
The system keeps watching wallet activity in real time.
If an exploit happens, unusual movements are detected on-chain.
Once coverage rules are confirmed, funds are paid out automatically without waiting for manual review.

Wallet contracts are connected directly to insurance contracts.
Coverage activates automatically when funds are deposited or held.
Protection funds are stored openly on-chain so balances are always visible.
Rules continuously monitor activity, and when a hack is confirmed, payouts happen instantly.
Only rare edge cases are handled by governance or a DAO.
Insurance works quietly in the background, not as a separate product users must manage.

The first step is deciding what the insurance should cover.
Coverage can be limited to one protocol or expanded across an ecosystem.
Different risks such as smart contracts, bridges, or custody must be clearly chosen.
Insurance can be optional for users, included by default, or offered as a mix.
These choices directly affect cost, complexity, and capital needs.

Different risks must be separated clearly.
Smart contract bugs cause losses through code errors.
Bridge failures happen during asset transfers.
Key loss or theft affects custody security.
Oracle or liquidity failures can distort prices and drain funds.
Each risk type needs its own rules and capital planning.

Policies must rely on clear on-chain signals that can be verified by anyone.
Events that are not covered must be listed clearly from the start.
Payout limits prevent extreme losses in one incident.
Coverage duration defines when protection starts and ends.
Policies can be represented as tokens or linked directly to user accounts.

Risk levels are measured using audits, TVL, usage data, and upgrade controls.
Only protocols that meet certain rules are allowed to join.
Pricing can be fixed, rule-based, or adjusted by usage.
Premiums change based on how much risk is taken.
If risk becomes too high, coverage can be removed automatically.

Funds are grouped into separate pools based on protocol or risk type.
Minimum capital levels are enforced to keep pools safe.
Liquidity providers follow clear deposit and withdrawal rules.
Stablecoin pricing is handled consistently to avoid confusion.
Extra safeguards prevent pools from being fully drained during extreme events.

Policies move through a full life cycle, from creation to expiration.
Premiums are tracked and routed into the right pools automatically.
Claims follow a fixed flow from detection to payout.
Oracles provide external signals when needed.
All actions are recorded on-chain, making audits simple and clear.

Governance controls key settings using multisig or DAO voting.
Emergency actions are available but limited.
Treasury health is monitored continuously.
APIs allow insurance to connect directly with exchanges, wallets, and DeFi apps.
Insurance is built into the system, not added later.

As DeFi grows across exchanges, wallets, and cross-chain systems, insurance becomes a core risk layer.
More frequent exploits mean platforms without built-in insurance will struggle to keep user trust.
TokenMinds helps design and build custom DeFi insurance platforms, from risk models to smart contracts, claims execution, and full integration into existing crypto systems.

Thank you for watching.
If you're ready to build DeFi insurance that protects users, reduces losses, and supports long-term growth, reach out to TokenMinds. We’d love to help you bring production-ready insurance into your crypto platform