Hardware wallet insurance seems impossible to scale without getting gamed to death.
Think about it:
- Users could claim "loss" while secretly keeping seed phrases
- No way to verify if someone actually got hacked vs just moving funds themselves
- Attackers would specifically target insured wallets knowing there's a payout
- Moral hazard goes through the roof when people know they're covered
The entire security model of crypto is "you are your own bank" - insurance breaks that. Who verifies the claim? What's the fraud detection mechanism when transactions are irreversible?
Maybe works for manufacturing defects or physical device failures. But covering private key compromise or social engineering? That's a honeypot for scammers.
Only viable model would be insanely expensive premiums that make it pointless, or so restrictive (multi-sig requirements, regular audits) that it defeats the purpose of self-custody.
The incentive structure just doesn't work.
Think about it:
- Users could claim "loss" while secretly keeping seed phrases
- No way to verify if someone actually got hacked vs just moving funds themselves
- Attackers would specifically target insured wallets knowing there's a payout
- Moral hazard goes through the roof when people know they're covered
The entire security model of crypto is "you are your own bank" - insurance breaks that. Who verifies the claim? What's the fraud detection mechanism when transactions are irreversible?
Maybe works for manufacturing defects or physical device failures. But covering private key compromise or social engineering? That's a honeypot for scammers.
Only viable model would be insanely expensive premiums that make it pointless, or so restrictive (multi-sig requirements, regular audits) that it defeats the purpose of self-custody.
The incentive structure just doesn't work.