Lombard Notes

DeFi’s Missing Primitive: Insurance

The episode examines why DeFi lacks a robust insurance primitive, outlining how existing protocols like Nexus Mutual, Y2K, and Ante Finance each address only parts of the problem—verification, capital efficiency, curation, pricing, and composability—while failing on others. It highlights the structural challenges of claim verification, low capital attraction, and the trade‑off between permissionless and curated markets, arguing that true on‑chain insurance must balance these dimensions and become a composable financial building block. The co‑author, quantitative researcher Francesco Mangia, emphasizes that without coordinated design across verification, pricing, and liquidity, DeFi insurance will remain a niche, under‑capitalized layer.