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What Is a ‘Credit Default Swap’ (CDS) and Is There a Crypto Equivalent for Exchange Insolvency?

A CDS insures against default. Crypto has synthetic equivalents via decentralized insurance protocols where premiums are paid for coverage against smart contract or exchange failure.
Greeks.Live19.11.25

What Is a ‘Credit Default Swap’ (CDS) and Is There a Crypto Equivalent for Exchange Insolvency?

A Credit Default Swap (CDS) is a financial derivative where the buyer pays a premium to the seller in exchange for a payoff if a specified credit event (like default) occurs for a reference entity. While no direct, regulated crypto-equivalent for exchange insolvency exists, decentralized insurance protocols offer similar protection.

Users pay a premium to cover the risk of a smart contract hack or exchange failure, receiving a payout if the event occurs, functioning as a synthetic CDS.

What Are the Mechanics of a Credit Default Swap (CDS) in the Context of Crypto?
What Is the Concept of a “Credit Event” in a Credit Default Swap (CDS)?
What Insurance Options Are Available for DAOs to Mitigate Losses from Smart Contract Exploits?
What Is a “Credit Default Swap” (CDS)?

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