Introduction

Cardano needs an insurance ecosystem — and staggering statistics show why.

Overview of the insurance need in Cardano

80% of surveyed Cardano users have faced financial loss from scams, such as rug pulls, leaving the ecosystem vulnerable to fraud. Meanwhile, a poll with 135 respondents showed that more than 50% have experienced scams more generally — either through wallet draining attacks, Discord hacks or impersonations.

Those who fall victim to malicious actors often receive little to no financial compensation. This deters people from continuing to use Cardano, prevents curious consumers from joining the community, and fuels a narrative of the network being a "Wild West" where lawlessness thrives.

But it doesn't have to be this way. A dedicated crypto insurance product, for everyday investors and entrepreneurs building on this network, would help establish safeguards to protect assets. This can be combined with educational initiatives that increase awareness about the warning signs of scams — and provide top tips on how to stay safe.

Key statistics on scams and financial impacts

Data from Chainalysis shows that, across the whole crypto industry, $4.6 billion was lost to scams in 2023. Many newcomers to the space have never heard of a rug pull, and wouldn't know what to do if they were targeted by fraudsters. In the meantime, countless investors end up losing substantial amounts of money — sometimes their whole life savings — owing to inadequate security measures.

Risk management within blockchains is in dire need of improvement, but greater knowledge about the latest trends in cybercrime is needed too. From social engineering scams to keylogger malware, the tactics deployed by scammers are continually evolving. Slowing Pains is a timely and essential insurance ecosystem designed to mitigate these risks — and enable users to navigate the blockchain with confidence.

In this lite paper, we'll set out how our crypto insurance products will be priced, the process of making claims, and outline a roadmap for future development.