Chainproof has launched today in Bermuda as the world's first regulated smart contract insurance provider.

The pioneering organisation was incubated by San Francisco-headquartered Quantstamp Inc, a leading blockchain security auditor that has secured more than $200 billion in digital-asset risk.

Chainproof Digital Asset Insurance Ltd is regulated by the Bermuda Monetary Authority and holds a class IGB (innovative general business) licence.

With seed investment and foundational support from Sompo Light Vortex and reinsurance backing from Munich Re, Quantstamp said, Chainproof bridges the worlds of traditional insurance and decentralised finance (DeFi).

Chainproof plans to offer licensed, institutional-grade insurance coverage for open-source, non-custodial smart contracts on public, decentralised blockchains in certain jurisdictions.

The rapidly growing world of DeFi has more than $70 billion of total value locked, a 6,000 per cent increase from two years ago, Quantstamp said, referencing DefiLlama, the DeFi TVL (total value locked) aggregator.

However, it said this growth comes with significant risk as hacks and exploits of smart contracts have occurred various times in the recent past.

Further, traditional insurers generally lack the historical data and technical expertise required to properly underwrite insurance related to smart contracts.

As asset managers continue to seek credible solutions to protect the growing crypto portion of their portfolio, the lack of regulated insurance has kept DeFi from achieving mainstream adoption.

Quantstamp said its technical knowledge and deep understanding of the web3 ecosystem enables Chainproof to identify the good risks in this market sector.

By combining forces with Sompo and Munich Re, global leaders in re/insurance, Quantstamp said, Chainproof is positioned to become the world's leading regulated smart contract insurance provider.

"Sompo is proud to be a foundational partner to Chainproof, a pioneering insurance provider for the growing DeFi economy," said Koichi Narasaki, CEO of Sompo Light Vortex and executive officer of Sompo Holdings.

"Chainproof represents the leading edge of regulated insurance solutions for the groundbreaking world of Web3."

Andre Knoerchen, head of new tech underwriting, Munich Re, said: "Quantstamp and Chainproof provide the specific risk assessment expertise which is needed to navigate the emerging DeFi insurance market.

“Institutional investors will be further enabled to succeed in the DeFi sector, if they are covered by regulated insurance, which we support through reinsurance."

Sebastian Banescu, CEO of Chainproof, said: "We are honoured to have been trusted by such distinguished partners in the traditional insurance industry as Sompo and Munich Re.

“Given the fact that there is no such thing as a 100 per cent secure smart contract system, we see the product offered by Chainproof as a must-have for institutional investors who want to navigate the DeFi space safely.”

Chainproof said it is backed by some of the top names in Web3, including Compound, Aave, Lido, Synthetix, Kyber, Amber Group, MakerDAO, Badger, DeFi Alliance, The Graph, Coinlist, Zynga, Illuvium, Hashgraph, Rally, Celo, Polygon, Blockfolio, Dapper Labs, and more.