LobsterDAO 🦞

10 Jul 2025 06:59

Will be interesting to see if Frax tries to freeze these funds (if even possible). 10m$ would be where you start to consider acting right vs ethos

LobsterDAO 🦞

10 Jul 2025 02:31

Yeah, I don't think should grade Nexus as a failure just because they didn't solve the whole problem. I think it is going to take 100 Nexus-types to actually insure the web3 space. And that is how it should be

LobsterDAO 🦞

10 Jul 2025 02:24

nexus mutual? how did they fail?

LobsterDAO 🦞

10 Jul 2025 02:19

Nexus failed. That was the biggest attempt. Ultimately, the insurance has to be huge enough to handle numerous (correlated) policies

LobsterDAO 🦞

10 Jul 2025 01:44

If there is a web3 model for insurance that can cover our own, I think that will eventually become a massive pillar of the industry

LobsterDAO 🦞

10 Jul 2025 01:43

So fuck Lloyd's, to my point lol

LobsterDAO 🦞

10 Jul 2025 01:39

That's why all the projects mentioned above can scale to only $5b at best, and in the $10s of millions at the realistic end

LobsterDAO 🦞

10 Jul 2025 01:37

ugh, can we do it without Lloyd's, though? Let's make a a Lloydefi against the suit-and-tie people

LobsterDAO 🦞

10 Jul 2025 01:34

I truly think it’s an education issue and I’m proposing with a few people that maybe we do a defi day in lloyds soon. Get some quants in and some actuaries in and do some work

LobsterDAO 🦞

10 Jul 2025 01:33

The craziest property of protocol insurance is you can’t just hack morpho and suddenly be like “crime seasons boyzzz” and then hit euler aave and kamino

It’s almost perfectly orthogonal and has really nice diversification

LobsterDAO 🦞

10 Jul 2025 01:31

Problem is most protocols make very little money

LobsterDAO 🦞

10 Jul 2025 01:30

4% of protocol fees?

LobsterDAO 🦞

10 Jul 2025 01:29

ALL HACKS EVER in a single year and you still make money with a 4% premium. That’s including all the proper bottom feeder protocols not even just top tier

LobsterDAO 🦞

10 Jul 2025 01:23

But you are saying that GMX could buy the 5% chance of getting hacked to offset the potential lose? In theory, I guess that could work, but there aren't liquid markets for that on any prediction market, especially not for the thousands of various DeFi projects that are out there holding $1m+

LobsterDAO 🦞

10 Jul 2025 01:17

If I put $1M of ETH into aave and borrow 400k USDC to go do stables stuff I'm paying 5% to stretch goal get 8% + eth yield 2%.

The prediction market for aave hack in 1 year would be like $0.95 no; so I buy yes at $0.05 and now my yield is treasury rates 😂

LobsterDAO 🦞

10 Jul 2025 06:16

https://x.com/PeckShieldAlert/status/1943162287595905409

LobsterDAO 🦞

10 Jul 2025 02:27

I disagree - they have a fantastic product for small coverage which fits specific needs. We need people like nexus to help build coverage towers

LobsterDAO 🦞

10 Jul 2025 02:22

Well, I still dream of that day

LobsterDAO 🦞

10 Jul 2025 01:47

But institutions are using L2s and DeFi products to an extent, and providing better security is priority #1, but supplementing that with native insurance coverage is what could give L2s like Base, Arbitrum, Avalance, etc. the safety net necessary to really start allocating

LobsterDAO 🦞

10 Jul 2025 01:43

but then that’s saying fuck real money and stay isolated and small 🙁 The big boys we’re after reeling into our amazing tech want lloyds not daos

LobsterDAO 🦞

10 Jul 2025 01:42

The issue for Lloyds is that in DeFi we haven’t shown that we actually have demand for this product. The demand needs to be in the hundreds of millions to actually make reinsurers give a shit. These guys underwrite big digits so doing 50m here and there on customised policies is literally a waste of their time if they can’t scale it

I think secondly they have compliance issues frankly as well paying out to randos

LobsterDAO 🦞

10 Jul 2025 01:38

Yeah, exactly. Degens aren't interested in an easy 4% lol

LobsterDAO 🦞

10 Jul 2025 01:37

My main concern isn’t the premium tbh - I’m fairly confident we can get good premiums as they underwriters aren’t stupid. My concern is that we can’t get enough underwriters to give a shit to cover the demand

LobsterDAO 🦞

10 Jul 2025 01:33

Yes, this is exactly what I was getting at! Again, I have no project to shill here, I don't think anyone is doing it at scale. But the economics make sense, and to disrupt the insurance (and really don't sleep on the reinsurance) industry is the most Satoshi thing we have left to do as an industry

LobsterDAO 🦞

10 Jul 2025 01:31

no that’s like an absurd extrapolation 4% is all hacks ever in a single year. I’m putting a statistical limit on what anyone could ever pay

If someone pays >4% they just don’t wanna insure you is the TLDR

LobsterDAO 🦞

10 Jul 2025 01:31

So you’d ask users to pay a 4% fee on each deposit or withdraw?

LobsterDAO 🦞

10 Jul 2025 01:30

What is a 4% premium?

LobsterDAO 🦞

10 Jul 2025 01:29

If people price the risk the stats don’t agree tbh. Out of the major defi protocols the biggest hacks have been largely bridges and even then it’s like 600m

https://www.theblock.co/data/decentralized-finance/exploits

Bizarrely they include bybit as a “defi” hack which makes no sense IMO

If you insured all the TVL in DeFi and paid out every single hack of all time (5.4bn) in a single year you would still break even on an insurance premium of 4%

LobsterDAO 🦞

10 Jul 2025 01:22

Send a link for prediction market of aave hack

LobsterDAO 🦞

10 Jul 2025 01:15

Insurance is the most well understood market design in essentially all economics.

You can have direct peer to peer market. A pooled model. A government model.

Pooled models have always inevitably ended up government models with maybe the exception of car insurance but even then disasters tend to get subsidized heavily by gov when there's an act of god. Peer to peer never scales.

Hacks are essentially the defi equivalent of acts of God.

In realistic terms, prediction markets are the closest bet.

"Will GMX (any version or v1 or V2 w/e) get exploited (and admit it was an exploit) for >$10M before Jan 1 2026 UTC".

But you don't see those markets do much b/c baseline assumption is no and spreads are wide relative to yield and protocol revenue