TechFlow News, December 27 — dForce founder Mike Cao tweeted that he has always believed on-chain DeFi insurance is a self-referential fallacy:
1. DeFi security incidents are not independent probabilistic events, so traditional actuarial logic doesn't apply—once one fails, everything gets drained across all protocols.
2. The market cap of a DeFi insurance protocol may not even reach 1/10 of a top-tier DeFi protocol—it would be drained long before it could cover losses. It's like an AAA-rated company issuing bonds guaranteed by a BBB-rated company?
3. A DeFi protocol’s own token is the last resort—when problems arise, they just solve it through token inflation.
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