Other · Underwriting
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.
Parametric protection markets for DeFi protocols.
Protocol TVL
$753.6K
Latest data · 15 min delay
Composable parametric protection markets with automatic settlement — coverage is expressed as tradable positions rather than mutual membership.
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.
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.
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.
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.
DeFi underwriting / parametric protection (insurance-like risk markets)
Cozy Finance homepage2020, United States (Cozy Finance, Inc.)
CoinDesk seed round coverageCozy Safety Module (CSM) — reserved capital pool that protocols use to reimburse users after qualifying losses
Cozy Safety Module docsNone announced for core protection markets / safety modules
Cozy Safety Module user FAQs$2M seed (2020); later profiles list additional VC backers (Polychain, Coinbase Ventures, CMS) without disclosed round amounts
CoinCarp Cozy Finance profileHow Cozy Finance maps onto established TradFi structures, and where it diverges.
Deposit insurance (e.g. FDIC)
Cozy Finance
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.
TradFi analogue
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
Cozy Finance
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.
TradFi analogue
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
Cozy Finance
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.
TradFi analogue
Reinsurance is intermediated by licensed institutions with actuarial pricing and legal contracts; Cozy underwriting is open, algorithmically priced (fixed/dynamic/-based), and settled on-chain without counterparties or legal recourse.
Payom Dousti
Co-founder Co-founder of Cozy Finance; previously co-founder of Rare Bits. Listed across company profiles as a founder of the protocol (founded 2020).
Tony Sheng
Co-founder Co-founder of Cozy Finance, previously of Multicoin Capital. At launch he framed Cozy around building blockchain-native risk-management approaches beyond simple position sizing.
Cozy Finance, Inc.
Operating company US-based company (founded 2020) that develops the open-source Cozy Protocol and Cozy Safety Module. Small team (reported ~5 employees as of mid-2024).
Seed
2020-09-03$2M
Key milestones: launches, upgrades, exploits and governance events.
Seed round / public debut
Executed$2M seed round led by Electric Capital; Cozy Finance founded to build DeFi risk-management primitives.
SourceEuler protection market payout
ExecutedCozy v2 Euler Finance market triggered and paid protection buyers following the ~$200M Euler exploit.
SourceZellic audit of Cozy Safety Module era
ExecutedZellic security audit associated with Cozy's Safety Module / stack development (dated Mar 2024 per Cozy's security listing).
SourceElectisec (yAudit) review of Cozy Safety Module
ExecutedElectisec (formerly yAudit) published a review of the Cozy Safety Module, finding a well-architected protocol with strong access controls.
SourceCertora formal verification
ExecutedFormal verification of Cozy's safety-module contracts by Certora (dated Dec 2025 per Cozy's security listing), part of ongoing security work.
SourceCozy Finance (the Cozy Protocol) is an open-source, parametric DeFi protection protocol. It lets protocols and users buy and sell protection against events like smart-contract hacks, exploits, and depegs. Its current flagship product is the Cozy Safety Module, a pool of reserved capital that protocols use to reimburse users after qualifying losses.
Yes. Despite an earlier venture-funded 'crypto insurance' era, Cozy did not shut down. It pivoted from its v1/v2 protection-market design toward a broader 'DeFi Safety Stack' centered on the Cozy Safety Module. Its GitHub org, docs, and app remain active, with security reviews continuing through late 2025 (formal verification in Dec 2025).
No governance token has been announced for Cozy's core protection markets or safety modules. The protocol operates without a native token for its core products; economic incentives flow through fees and creator-defined reward emissions rather than a governance token.
A protocol creates a safety module and defines what qualifies as a covered loss. Suppliers deposit capital into the module and earn rewards set by the creator. If a qualifying loss occurs and the trigger resolves, the deposited funds are slashed and paid out to affected users, up to the module's cap. If funds are insufficient, users typically receive pro-rata payouts.
Yes. In March 2023, while Cozy v2 was in early access, it had an active Euler Finance protection market. When Euler Finance was exploited for roughly $200M on March 13, 2023, that market triggered and paid out protection buyers, an early real-world demonstration of the protocol.
