Risk in the Bitcoin Ecosystem

The Bitcoin ecosystem is undergoing swift transformation, driven by developments such as BTCFi, Bitcoin Layer 2 (L2) solutions, and native staking protocols, all of which enhance its role in decentralized finance (DeFi). Yet, these advancements bring a range of risks that require careful oversight to promote long-term stability.

To tackle these issues effectively, risks in the Bitcoin ecosystem can be grouped into two main types:

Economic Risks

• Slashing Penalties: Losses incurred from non-compliance or validator errors in staking systems.

• Wrapped Bitcoin Assets: Weaknesses or mismanagement risks tied to synthetic Bitcoin-based tokens.

• Stablecoin Depegging: The danger of a stablecoin drifting from its target value, affecting Bitcoin-backed collateral and DeFi activities.

Technical Risks

• Hacks and Exploits: Attacks on smart contracts, bridges, or other protocol components.

• Security Breaches: Unauthorized access or flaws in blockchain systems.

• Governance Risks: Failures in decentralized governance due to poor design or harmful proposals.

At Satsurance, we place economic risks at the forefront, given their direct influence on the trust of Bitcoin holders and institutional players. Our starting point is to offer protection against slashing penalties, risks tied to wrapped Bitcoin, and stablecoin depegging—key concerns for cautious Bitcoin users looking to safeguard against losses.

As our platform matures, we plan to broaden coverage to include technical risks, tackling threats from hacks, exploits, and governance issues. This step-by-step strategy allows us to create a dependable and robust insurance framework, addressing the most urgent risks first while adapting to the evolving demands of the Bitcoin and DeFi ecosystems.