The real dilemma faced by insurance companies: holding too many policies concentrated in certain regions. Take a major European reinsurance firm as an example—Florida property policies are enormous, and a Category 5 hurricane landing could trigger a financial crisis. The traditional solution is to issue catastrophe bonds (Cat Bonds), but completing the full process with lawyers, investment banks, and custodians takes six months and is costly.

On-chain transformation is changing this situation. Insurance institutions are beginning to issue tokenized catastrophe bonds on Ethereum, setting clear trigger conditions through smart contracts: wind speeds exceeding 150 miles per hour, location locked in the Miami coastal area, with data sourced from the National Oceanic and Atmospheric Administration (NOAA). Oracles are responsible for reliably bringing real-world meteorological data onto the chain.

This innovation has led to an unexpected influx of capital. Due to significantly lowered entry barriers, global DeFi users see opportunities—an investor from Japan can directly earn an annualized return of 15% on a decentralized platform. By purchasing these bonds, they are essentially betting that hurricane season will not bring disasters.

For insurance companies, this means rapid risk transfer and instant underwriting capabilities.

But all participants overlook a critical issue: when hurricane season truly arrives, the entire ecosystem's focus shifts to the data stream from oracles. At this moment, oracles have become the ultimate arbiters of trillion-dollar asset allocations. If the data is polluted or tampered with, all financial innovations could collapse in an instant. This is not just a technical problem but a test of trust.