At 4 pm on March 13, 2021, Oliver Xie, the founder of InsurAce, visited the Uniswap Chinese community. Hosted by Captain Captain, the co-founder of BlockArk, he conducted an AMA themed on "How does InsurAce, a rookie in DeFi insurance, realize diversified insurance business with comprehensive investment and wealth management functions" Event, this live broadcast event is supported by BlockArk, ChainNews, Odaily, Block Beats, Encryption Pavilion media support, the content of the live broadcast sharing is organized as follows:
Captain: Hello everyone, welcome to today's AMA held by BlockArk in the Uniswap Chinese community. I am today's host Warren, the co-founder of BlockArk. At the same time, thank you, Lianwen, Block Rhythm, and Encryption Pavilion for their support for this event.
Before the event begins, let me briefly introduce BlockArk. BlockArk is an investment bank and marketing agency in the encrypted asset industry. It manages ArkStream Capital, a primary and secondary fund focused on cryptocurrency. BlockArk integrates investment, branding, market growth, and strategic consulting, and is committed to promoting the growth of Web3.0 unicorns.
The theme of today's AMA is "How InsurAce, a rookie in DeFi insurance, realizes diversified insurance business with comprehensive investment and wealth management functions". The guest is Oliver Xie, founder of InsurAce.
Today's AMA event is divided into two stages. The first stage is the theme question and answer. I will ask 10 prepared questions in the form of one question and one answer. After 10 questions, it will enter the second stage, free question and answer. Group friends can freely ask guests questions, and guests are free to choose 4-5 questions to answer. The small partners who are selected for the problem will share the 50USDT reward together.
Hi Oliver, come say hello to everyone!
Oliver: Good afternoon, everyone. I am Oliver from InsurAce. I am very glad to come to the BlockArk community for an exchange today. I hope to have a pleasant AMA. Thank you.
Captain: Before we start, can you briefly introduce your team and project?
Oliver: Thank you for giving InsurAce this opportunity to communicate in front of colleagues in the industry. InsurAce is a decentralized DeFi insurance protocol, which aims to provide reliable, robust and worry-free DeFi insurance services for DeFi users.
The characteristics of our platform include: "package" insurance services, which can provide extremely low premiums; at the same time, it also has investment functions, providing users with the advantages of stable income, rich product lines, and low entry barriers, and can provide users with guaranteed and profitable insurance. insurance services.
At present, InsurAce has been launched on the Rinkeby test network and is being tested in the open community. Next Monday, we will launch a token launch on the balancer LBP. Everyone is welcome to participate.
Let me briefly introduce our team.
The InsurAce team was initiated by me, including former IBM blockchain experts, chief actuaries of large insurance companies, bank executives, lawyers, security experts from Tencent, etc., bringing together professionals from inside and outside the industry.
I myself have led the team to create the InsurAce project since September 2020. Before that, I worked as a CTO for a compliant derivatives exchange in Singapore. I started working on cryptocurrency in 2017, and have been working on Fintech and open finance in the past few years.
Captain: Thanks for Oliver's introduction, then we will officially start the question session of today's AMA.
Captain: The first question is that DeFi insurance is in a very early stage of development. Neither Nexus Mutual nor Cover, the two star insurance projects, have a total policy value of no more than 30 million US dollars, and the maximum coverage fund of the policy has not exceeded 2 billion. 2.5% of the entire DeFi market, what do you think is the reason why other sectors of DeFi have risen one after another, but they have not been able to make a big step in the insurance track?
Oliver: Okay, thanks for the question. First of all, although the TVL insurance coverage rate of the entire DeFi is less than 2%, we have talked with many people in the industry, and everyone thinks that the final coverage rate of 8%-10% should be a ratio that can be expected. The potential of the forum is huge.
Secondly, regarding the further development of the insurance industry you mentioned, I think there are many reasons. One of the main reasons is that insurance still belongs to the category of risk management and belongs to a following position. Generally speaking, the overall industry It is the cash business that advances first, and then the risk management and other things keep up. In fact, in the past few months, we have seen that the TVL, insurance amount, and insurance premiums of the insurance industry have been increasing rapidly, which also reflects that with the continuous development of DeFi, the awareness of risk management is also increasing. This number will continue to increase.
Third, I think that insurance is different from lending, exchanges, etc., where liquidity and yield are king. The insurance track is a track that can build user trust, user loyalty and brand, which also takes time. accumulation and precipitation. Overall, we believe that insurance is a track that needs deep cultivation and deserves long-term focus. At present, it has just started, and there is still a lot of space, but it also needs great efforts to develop and cultivate.
Captain: Thank you Oliver for your serious answer. Here is the second question. In traditional insurance institutions, in addition to underwriting and earning premiums, a larger part of the income comes from investment portfolios. So what I want to ask is what is the source of income for InsurAce assets? And how to attract capital and expand TVL?
Oliver: In traditional insurance institutions, the general model is joint-stock insurance (mutual insurance is a minority), and their model is generally to attract premium funds at a very low cost, and then use them to invest to earn returns, so the asset side and the liability side are both relatively clear.
For DeFi insurance projects like InsurAce, we are first of all a mutual insurance model. The source of funds is not a shareholding system, but a pledge (staking) from users. Therefore, the returns we give to these pledged users include 3 parts:
1. Token incentives; 2. Premium sharing; 3. Investment income.
Among the above 3 parts, 1 is the most important user income, 2 and 3 belong to a relatively long-term cash flow income, but compared with the various high APYs in the current DeFi industry, they are still relatively low.
In the part about the income of assets, the investment part is also the characteristic of our project. This is what other projects such as nexus and cover have not done. It is the two-wheel drive model of insurance and investment. Insurance escorts investment, and investment income feeds back the insurance business.
Attracting funds and increasing TVL, we believe that insurance agreements are slightly different from other DeFi agreements on this issue. We do not mean that the bigger the TVL, the better, but to dynamically absorb funds according to our underwriting volume. For example, if the current demand for insurance is huge, we will increase APY to attract more funds and provide greater insurance capacity; when the demand for insurance falls, we will properly control it to maintain a dynamic balance between supply and demand.
For TVL, we think there are several points:
1) Safe, safe, still safe! The platform is not safe, and TVL is debt.
2) Manage APY reasonably;
3) Provide pledge of more assets. We have also talked with the Huobi team many times. We plan to introduce Huobi’s H-series assets as collateral to expand the scope of assets.
Captain: The third question, how does InsurAce reasonably allocate investment products? How to ensure the safety of funds, how to isolate capital risks, is there a graded investment plan?
Oliver: Let me share a picture first.
This is a business architecture diagram of our platform. As you can see, in the investment section, there are two types of pools: low-risk and high-risk pools.
For low-risk investment pools, there are two main considerations: 1) the risk of the DeFi protocol to invest in; 2) the risk of the investment strategy.
Therefore, for low-risk investments, we will mainly consider relatively safe channels such as: lending on compound/aave, uniswap, etc. for liquidity supply, and eth2.0 pledge.
For the high-risk part, we will mainly cooperate with the third-party income platform to create a "safe financial management entrance". A simple example, many people will go to other platforms to mine, but they are worried about safety, so buy an insurance, then we can cooperate with a third party, we provide an entrance, and the funds still flow back to the third party, but we add in the middle A layer of insurance; in this way, we have taken more insurance to attract traffic to the three parties; user mining + insurance is completed in one transaction, saving money, trouble, and worry.
For the security of funds, we have made multiple layers of guarantees at the technical level, such as pool separation, multi-signature, agency contracts and other solutions. Investment funds and insurance funds are separated.
Captain: Generally speaking, the whole process of insurance is divided into three parts: purchasing insurance, underwriting, and compensation. I would like to ask some questions about these three processes. First of all, in terms of purchasing insurance, the design of insurance products provided by InsurAce is similar to that of NXM and What are the differences or advantages of Cover, and what are the pricing factors of premium rates?
Oliver: OK. I first share a picture, which is a product comparison.
Nexus Mutual is a mutual fund pool insurance model, while cover is a p2p insurance model, so in essence, the two are not particularly comparable because the models are different. Our model is more similar to Nexus. So I will focus on this comparison.
In terms of insurance, our biggest feature is: a package of insurance (portfolio-based cover). Simply put, you can buy insurance for multiple Protocols at one time. This model is our original creation. The benefits are also obvious: 1. Risk pricing is more accurate, and we will calculate the correlation between different agreements;
2. Lower premiums;
3. The gas fee is lower, one transaction can cover multiple agreements, otherwise you have to buy multiple times and spend more gas fee;
4. Save time and effort.
SCR, full solvency capital requirement, is an insurance industry fund management standard widely adopted by the European Union. He requires insurance providers to maintain sufficient funds, and within 12 months, there is a 99.5% probability that they will not go bankrupt. Our capital adequacy ratio is formulated and controlled based on this benchmark.
MCR is a lower-level funding requirement than SCR. Nexus Mutual is using this standard. In fact, you may also find that some time ago, Nexus Mutual faced the problem of MCR%=100%, and imposed many restrictions on users. .
This is a simple schematic diagram, you can distinguish the difference between SCR and MCR. The part above the SCR, free capital, is the part we mentioned earlier to be used for investment.
Captain: Is there a threshold for users who can participate in insurance? Will there be strict KYC like NXM? Can you show us a demo of the product and simulate the process of user participation in insurance?
Oliver: There is no KYC. We believe that Permissionless is the core essence of DeFi. Our products are inAvailable directly on www.insurace.io. I'll just show you a screenshot. (Related videos are still in production)
Buying insurance with us is like shopping online. You can select one or more contracts you want to insure, put them into the shopping cart, and then calculate the premium for you, and then purchase.
The quantity and days to be insured are very flexible. This can meet the diverse needs of farming users.
For more detailed products, welcome to our official website to experience:www.insurace.io, click on the upper right corner"launch app"to enter.
Active covers will be displayed below after the insurance purchase is successful;
Expired covers are expired policies. Claims can also be filed within 30 days after the policy expires.
Currently participating in the test, there are also airdrop rewards. Having said that, let me share a piece of data by the way.
This is the number of users who participated in our testnet two weeks ago. Thousands of wallets have been connected to participate in the test, and the entire platform runs stably and smoothly.
Captain: The next question, the coverage is a point that we are very concerned about. For example, the coverage of NXM is "unexpected use of the code", so the Maker liquidation loss caused by 312 has not been successfully claimed on NXM. So how does InsureAce determine the coverage?
Oliver: InsurAce will mainly cover security issues caused by "smart contract vulnerability" in the initial stage of the platform's main network.
As mentioned above, the liquidation loss of the maker should be protected by a new type of insurance separately.
Our next step is to expand the scope of coverage to a larger scope, such as centralized exchange theft risk, wallet risk, custody risk, oracle risk, layer-2 risk, etc.
Our philosophy is to be an insurance expert in the DeFi field, where there is risk, there is InsurAce.
Captain: Next question, generally speaking, the claim process of insurance projects is related to Dao governance. What is the whole process of InsurAce claim payment? What are the advantages over established insurance programs?
Oliver: We are also based on DAO, which is what DeFi should mean.
Secondly, our differentiation lies in:
1. There is a centralized claims committee, which is composed of technical experts, legal consultants, insurance experts, audit companies, community members, etc. Most importantly, they must have sufficient professional capabilities to investigate and judge , Review whether a claim is a problem caused by a smart contract vulnerability. This kind of problem, to be honest, is often very complicated and requires people with professional skills to investigate.
2. After the investigation, the committee forms a reference opinion, which is sent to the DAO for voting (please note: it is only a reference opinion, not a direct ruling). Otherwise, due to the complexity of these claims, it will be difficult to form an effective, fair and just judgment completely relying on DAO's direct voting, which is crucial to the long-term development of the insurance agreement and the establishment of user trust.
Of course, in the early stage of platform operation, the insurAce team will mainly select the composition of the committee. As the community matures, these can be gradually handed over to the community for selection and decision.
The operation of the committee is slightly centralized, but the establishment of the committee is decentralized.
There is a delicate balance here, which is unique to insurance agreements.
Captain: I was very confused about the compensation process and compensation standards of the insurance project. I hope that InsurAce can be more fair and just in the future. The next question is about the INSUR token. What are the main uses of the INSUR token in the entire ecosystem? What are the factors that determine the currency price?
Oliver: This is what I mentioned earlier. Fair and just claims settlement is crucial to the confidence and loyalty of resume users, and it cannot be left alone at the beginning.
INSUR is the native governance and utility token of InsurAce. Then its main application scenarios include:
1. INSUR is given as a mining reward to liquidity providers who use insurance and investment products in InsurAce, that is, users who use InsurAce insurance and investment products can get INSUR rewards;
2. Users holding INSUR tokens can have voting rights in multiple community governance scenarios, such as claim evaluation, proposal voting, etc.;
3. IINSUR tokens can be used as a certificate for token holders to share platform revenue;
4. Community reward mechanism.
The factors that determine the currency price, of course, this is a very complicated issue. I think in the long run, the amount of funds, insurance coverage, policy income, claim probability and amount, number of users, average income per order, etc. of the insurance platform are all platform business. Core indicators; in the short term, of course, market sentiment, market fluctuations, market news, capital flows, etc. will all affect the currency price.
Captain: Good, the insurance project needs to settle down slowly. I hope you will pay attention to the dynamics of InsurAce for a long time. Next question, we also know that INSUR will soon conduct LBP public offering. Can you tell us the specific details?
Oliver: OK. Let me share a picture first, which is the core parameter of LBP.
The time is next Monday at 10:00 pm (Beijing time) and lasts for 48 hours. The starting price is 4.5 US dollars.
Of course, everyone should pay attention to that LBP is different from ordinary public offerings or auctions. It is a reverse auction, and the price is auctioned from high to low, so don’t rush into it at the beginning, you can wait until the price falls back to the reasonable range you think , and then buy appropriately.
For details, welcome to visit our website:
There are relevant documentation descriptions in it.
Captain: I am looking forward to the LBP in 2 days, so one last question that investors care about, what is the investment background of InsurAce?
Oliver: OK. We completed the seed round of fundraising in early November last year, invested by top domestic and foreign funds, including: DeFiance, parafi, huobi defi labs, #hashed, signum, etc.
At the end of February this year, the private equity round of financing was completed, including investment from institutions such as alameda, hashkey, and IOSG, and the above-mentioned seed round funds also followed suit. Overall, InsurAce has a very top lineup of investors.
【Free question and answer session】
【Free question and answer session】
Question: Hello, I would like to ask, which projects will InsurAce choose to cooperate with in terms of optimizing revenue?
Oliver: As mentioned above, in terms of low-risk investment, we mainly choose relatively safe and stable platforms such as AAVE/Compound, ETH2.0, and Uniswap for cooperation. In the high-risk area, we have talked a lot with alpha finance, and we will do a pilot with them, that is, the way of safe investment/mining entrance.
Q: Is there any expectation of going to the three major institutes in the later stage?
Oliver: Yes. You may have noticed that both Huobi and OKEx have invested in us, and we have been actively communicating with Binance. The above is something we will definitely do, and we are also working hard to promote it.
Question: Hello, I would like to ask, with the growth of DeFi funds, will 2021 be the era of concentrated explosion of insurance projects?
Oliver: I think it is very possible, in fact, the insurance track is greatly underestimated. Compared with the traditional financial industry, the business volume of insurance is on the same level as that of banks, while exchanges are actually relatively small.
But in the various DeFi tracks, lending (analogous to banks) and exchanges are currently the biggest valuations, and the insurance agreement is less than the volume of a first-line DEX, which is unreasonable.
We believe that the insurance track will usher in an explosion. Moreover, with the continuous development of DeFi and the continuous improvement of risk management and control awareness, it will continue to make efforts.
Question: Hello, Oliver, I work in a traditional insurance company. Generally, in traditional insurance companies, the requirements for funds are often pursued for safety and low returns. Generally, the annualized rate is only 5-7 points, or even lower. Is your project also like this, or do you have stricter control over risks?
Oliver: Since we have token incentives, this part of the income is often relatively high, so this is the main income of early user funds. As for the return on investment, for the sake of safety, I think the platform we put on will be higher than this 5-7%, but it will not be an order of magnitude higher. Of course, with the long-term development of the platform, greater revenue channels will be highlighted.
Q: How can insurance projects ensure that there are no safety issues? cover was hacked
Oliver: This is a very good question. In fact, this is not a pain specific to insurance projects, but a pain of the entire DeFi. The insurance agreement helps other DeFi projects relieve this pain at the cost of bearing greater pain. Therefore, safety is the top priority for insurance agreements. In addition to the strengthening of technical means, we are also discussing cooperation with traditional insurance companies, and want to transfer part of our risks to the outside world, which is also a risk outlet for the entire DeFi. Otherwise the risk is just an inner loop.
Q: You also mentioned that the apy may be relatively low, so how do you ensure the number of users in the later period? Are there any other plans to attract later?
Oliver: This is a system engineering, which requires the continuous development of the platform business itself, as well as the continuous development and maturity of the industry.
Q: How many tokens will be given to test an airdrop?
Oliver: After the test, we will select more valuable feedback and give an airdrop, which will be airdropped after the end of the LBP. The amount is undecided, and the price of the token will be seen at that time.
Captain: Alright, today’s AMA is over here. Thanks again for Oliver Xie’s wonderful sharing. For the extra winners, you can privately chat with sumi@BlockArk assistant registration information. Thank you for your active participation!
Oliver: Thank you Warren for hosting, and thank you all for your time and patience. Please continue to pay attention.
*Note: This article is only for research discussion and information sharing, not as investment advice.
*Note: This article is only for research discussion and information sharing, not as investment advice.
