Cozy Finance

Cozy Finance (Cozy Protocol) lets users buy and sell parametric protection against protocol-specific triggers. Protection markets settle automatically when on-chain conditions fire — no token governs the core markets today.

Composable parametric protection markets with automatic settlement — coverage is expressed as tradable positions rather than mutual membership.

- Cozy Safety Module (CSM): Cozy's current flagship product: a dedicated on-chain pool of capital that protocols reserve to reimburse their users up to a specified cap in the event of a hack, exploit, or other qualifying loss. Suppliers deposit capital and earn creator-defined rewards; if a covered loss is triggered, deposited funds are slashed to pay affected users. Described by the team as FDIC-like protection for on-chain assets. - Protection Markets: Market-based contracts that let protocols spin up insurance-style markets against tail risks (e.g. smart-contract hacks or stablecoin depegs). Buyers purchase protection while providers underwrite the risk and earn fees/yield collected each time protection is bought or sold. Markets support fixed, dynamic, or custom utilization-based pricing and use customizable trigger templates that define payout logic. - Triggers: Configurable payout-condition modules that define what constitutes a qualifying loss for a given market or safety module. Trigger resolution can be automated on-chain or governed by a DAO/multisig chosen by the market/module creator, determining when funds are paid out to protection buyers. - Tranche & Reserve (DeFi Safety Stack): Complementary primitives in Cozy's broader 'DeFi Safety Stack.' Tranche splits protocol yield into risk tranches where junior stakers absorb losses first; Reserve establishes asset backstops to cover shortfalls. Together with Protection Markets and the Safety Module they form Cozy's layered risk-management offering for protocols seeking safety-conscious capital.

- Cozy Finance (no native token) (—) — Token, No native token

- Smart Contract: Cozy is entirely smart-contract-based; a bug in the safety-module, trigger, or protection-market contracts could cause loss of supplier capital or failure to pay valid claims. Mitigated but not eliminated by multiple audits (Zellic, Cantina, Electisec) and Certora formal verification. - Counterparty: Protection is only as good as the capital supplied by underwriters. If a safety module or market is under-collateralized relative to a loss, users receive only pro-rata payouts, so buyers bear the counterparty/capacity risk of insufficient reserves. - Oracle: Payouts depend on trigger resolution. Triggers that rely on price feeds, external data, or automated conditions can misfire (false positive/negative) if the underlying oracle or data source is manipulated, delayed, or wrong. - Governance: For non-automated markets, claim/trigger resolution can be delegated to a DAO or multisig chosen by the module creator. This introduces discretionary human/governance risk over whether and how much a valid claim is paid. - Systemic: As DeFi-native cover, Cozy is exposed to correlated tail events: a large market-wide exploit or contagion could simultaneously trigger many modules and exhaust provider capital, and the protocol has no external insurer-of-last-resort backstop.

- Deposit insurance (e.g. FDIC): similar — The Cozy Safety Module is explicitly likened to FDIC-style protection: a reserved pool of capital that reimburses users up to a cap when a qualifying loss event occurs.; differs — FDIC is a government-backed guarantee funded by member banks with statutory coverage limits; Cozy is a permissionless, on-chain, capital-at-risk pool funded by private suppliers who can be slashed. Coverage terms are defined per-module by the creator, there is no sovereign backstop, and payouts are limited to deposited capital. - Parametric insurance: similar — Cozy protection markets pay out based on predefined, objectively verifiable trigger conditions rather than a claims-adjustment process, mirroring parametric insurance where payouts are tied to a measurable event.; differs — Traditional parametric insurers are regulated entities carrying the risk on their balance sheet; Cozy is a non-custodial protocol where anonymous providers underwrite risk for yield, triggers are enforced by smart contracts or a DAO, and there is no insurer of last resort. - Reinsurance / risk underwriting pools: similar — Protection providers on Cozy act like underwriters, supplying capital to cover others' risk in exchange for premiums/fees, similar to how reinsurers pool capital against tail events.; differs — Reinsurance is intermediated by licensed institutions with actuarial pricing and legal contracts; Cozy underwriting is open, algorithmically priced (fixed/dynamic/utilization-based), and settled on-chain without counterparties or legal recourse.