- Global study shows 20% believe protection or insurance is essential and 70% say it is important for blockchain-based lending strategies
- Two out of three have used third-party insurance protecting against smart contract exploits
Institutional investors and wealth managers are concerned about the cyber and smart contract risks of blockchain-based lending and are increasingly turning to third-party insurance, new global research* from Brava Finance, the non-custodial stablecoin management platform, shows.
Its study found 20% believe protection or insurance against cyber and smart contract risks is essential for blockchain-based lending strategies. Another 70% believe it is important while just 10% say it is a ‘nice to have’.
Brava Finance, whose platform helps users access stablecoin-based credit strategies through decentralized finance (DeFi), has launched its Stablecoin SMA and first credit fund, which offers institutional-grade access via a regulated Cayman vehicle. The fund employs leading custody solutions such as Fireblocks and Northern Trust.
Around two-thirds (66%) of the investors questioned in the US, UK, UAE, EU, Brazil, Singapore, South Korea, Switzerland and Hong Kong say they have used third-party insurance products to protect against smart contract exploits. A further 31% say they are aware of the products but have yet to use them.
The research found widespread awareness of blockchain-based credit and yield strategies that can be accessed using stablecoins. Investors are most familiar with on-chain money market protocols and real-world asset-backed lending but familiarity is high across all strategies they were asked about as the table below shows.
| Strategies | Percentage very familiar | Percentage somewhat familiar | Percentage who have heard of | Percentage not familiar |
| On-chain money market protocols | 65% | 30% | 3% | 2% |
| Real-world asset-backed lending | 58% | 41% | 1% | Zero |
| Lending to over collateralized borrowers | 47% | 49% | 3% | 1% |
| Market neutral arbitrage or basis trading | 46% | 50% | 3% | 1% |
| Automated market making strategies | 44% | 51% | 4% | 1% |
The research found more than two out of five (44%) surveyed would be comfortable or very comfortable allocating to a lending strategy on platforms without knowing who the borrowers are or what collateral is used. Around 38% would be very or somewhat uncomfortable.
Graham Cooke, CEO and Founder at Brava Finance, said: “Institutional investors and wealth managers are very aware of the potential risks from cyber or smart contracts and need the reassurance of some form of protection or insurance.
“Their use of third-party products highlights how important it is for providers and platforms in the stablecoin sector to address the issue of cyber and smart contract risks.”
Brava Finance’s first fund is a Cayman-regulated credit fund designed to offer secure, professional access to crypto markets without the volatility. It is built entirely on Brava’s on-chain stablecoin credit & risk infrastructure.
It targets 8% to 12% annual returns, offers next day liquidity, is fully diversified and institutionally structured with no directional exposure to Bitcoin or other volatile assets.
Returns are powered by 100s of established blockchain-based collateralized lending markets—similar to Lombard loans in traditional finance. Crypto holders such as Bitcoin owners deposit their assets into smart contracts and borrow stablecoins against them, paying interest. If their loan-to-value ratio becomes risky, the system automatically and orderly liquidates collateral—eliminating default risk.
