# Problem Statement

In both DeFi and traditional finance, access to reliable insurance or coverage for high-risk positions and assets remains limited and costly. Traditional insurance models often require large capital commitments upfront and charge expensive premiums, making coverage inaccessible or economically unviable for many users. Furthermore, existing solutions lack transparency and tend to impose rigid pricing structures, disconnecting coverage costs from actual market risk.

SAFU addresses this gap by providing decentralized, on-chain coverage that is both capital-efficient and fairly priced. Unlike conventional insurance models, SAFU enables participants to secure coverage without upfront capital requirements. Through a transparent, market-driven yield distribution framework, SAFU offers real-time risk assessment and fair pricing, allowing users to obtain reliable coverage in a way that is both efficient and aligned with actual market dynamics.

So…we could claim that today on chain insurance is:

* Not available in scale or a capital efficient way in DeFi Today
* in TradFi & DeFi you need to put capital upfront
* Pricing mechanisms which has Product Market Fit in Tradfi are not having success in DeFi, making that getting any sort of coverage on your positions is extremely expensive (in both nominal and relative terms)
