Reinsurance Market Transplants onto Blockchain

The reinsurance market is emerging as a new revenue source in decentralized finance (DeFi) thanks to Alea Research's analysis of the Re protocol.

Reinsurance, which redistributes risks borne by insurance companies, has traditionally been limited to institutional players. However, the Re protocol has redesigned this structure into an on-chain real-world asset (RWA) form, allowing stablecoin holders to access underwriting yields more directly.

The Re protocol uses reUSD and reUSDe, which are designed as senior and junior capital respectively. reUSD seeks relatively stable returns with a priority repayment structure, while reUSDe absorbs losses first in exchange for higher expected returns.