On-chain reinsurance yields offer uncorrelated returns
The guest argued that on-chain reinsurance protocols can provide stablecoin depositors with high, uncorrelated yields by collateralizing low-volatility real-world insurance policies.
The argument
The guest explained that by leveraging capital five to seven times in regulatory trust accounts to back predictable insurance lines like auto and workers' comp, protocols can generate double-digit yields. This model replicates the traditional 'float' investment strategy used by firms like Berkshire Hathaway and Apollo Global Management, but executes it via smart contracts.
The thesis, stress-tested
✓ What validates it
- ✓Growth in Total Value Locked (TVL) in on-chain reinsurance protocols
- ✓An increase in the number of active insurance treaties executed on-chain
▸ Risks discussed
- ▸Systemic insurance losses
- ▸Regulatory compliance hurdles in moving capital between on-chain and traditional trust accounts
- ▸Smart contract and protocol risks
Hear it yourself
"You're gonna end up with $5,000,000,000,000 of USD stablecoins on chain. And all of these people are gonna say, yes. I'm so glad I have dollars now. Wouldn't it be great if I could make 4% using treasuries? And then immediately, a large percentage of those people, I think, twenty, thirty, 40, 50, maybe 80% of them will say, wait a second. I would like to make more than 4%. How do I do that? And so they'll go hunting for yield. And so the really interesting thing about stablecoins, in my opinion, is that you have created a new capital market."
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