What Insurance Options Are Available for DAOs to Mitigate Losses from Smart Contract Exploits?

DAOs can purchase coverage from decentralized insurance protocols like Nexus Mutual or Cover Protocol. These platforms operate as mutuals where members contribute capital to a pool to cover claims.

A DAO can buy a policy that pays out if one of its specific smart contracts is exploited. The claims process is typically handled by the protocol's own members, who vote on the validity of a claim.

This provides a crypto-native way to hedge against the significant financial risk of smart contract vulnerabilities, protecting the DAO's treasury and its members.