What Is Re Protocol? The Project Putting Real-World Risks Onchain

The Real World Assets (RWA) space has seen explosive growth over the past year. Stablecoins definitely helped kick things off, but now we are seeing traditional financial products making their way on-chain in ways that just were not possible before.

One of the interesting projects at the crossroads of DeFi, TradFi, and RWA is Re Protocol. It is doing something no one’s really done before—it is putting reinsurance on-chain.

What is reinsurance? It is basically insurance for insurance companies. When insurers take on big risks, they don’t always want to cover the full cost alone. Instead, they share the risk with reinsurers. For example, if an insurer covers a $10 million building but only wants to be responsible for the first $5 million, a reinsurer can take on the rest. So if there is a $6 million claim, the reinsurer picks up the extra $1 million.

Until recently, access to reinsurance—and the returns that come with it—was mostly limited to big institutions. But Re Protocol is changing that by using blockchain to open things up to a wider range of investors.

Here is how it works: users can deposit stablecoins like USDC, DAI, USDe, and sUSDe into what are called Risk Pools. In return, they get reUSD or reUSDe (for Ethena users) tokens. Those funds are then used to back a variety of reinsurance contracts, all managed by experienced professionals called Cell Managers. The idea is that users earn yield from these contracts, and that yield is not tied to typical market ups and downs, making it a more stable investment option.

Cell Managers play a big role. They are the ones finding and managing these reinsurance deals, and they need to be vetted before they are allowed to run a pool. The founder of Re Protocol actually owns CoverRe.com, a real commercial reinsurer, which gives the project direct access to the kinds of contracts that make this model work.

There is also a unique partnership with Ethena. Through this, Ethena users can earn double yield—their regular stablecoin yield plus an extra return from Re Protocol’s reinsurance strategy. These users get a separate token, called reUSDe.

According to Re Protocol’s website, the platform currently offers up to 23% APY and has over $135 million in total value locked (TVL). It runs on Ethereum, Avalanche, and Arbitrum. The returns are split up like this: 88% of net profits go to reUSD (or reUSDe) holders, 2% goes toward management fees, and 10% is taken as a performance fee.

It is not completely open to everyone, though. You will need to go through KYC to use the platform, and it is not available to users in various jurisdictions, including countries such as the U.S. or Russia. There is also a 40-day minimum holding period before you can redeem your tokens. However, they are working with Curve to create options for faster liquidity and early redemptions.

Now, just like with any insurance-related product, there are still risks. But the Re Protocol is taking a conservative approach. They are starting with low-volatility, short-term contracts to keep things predictable. Additionally, all Cell Managers go through serious checks—KYB and AML screenings—and all Risk Pools are fully collateralized, which means there is enough capital set aside to cover any claims.

The goal here is to give people a way to earn yield without exposing them to unnecessary risk.

Also worth noting: both reUSD and reUSDe are standard ERC-20 tokens, so they can be used across DeFi for lending, borrowing, staking, farming, and so on.