1. Today's last thread. It's not about $ftm, but a project i love. It's about @CoverProtocol. Despite the last bug news, i still love the project. I hate middlemans all my life, and insurance companies are one big middle mans. Let's start.
2. If you think about insurance, it's like a reversed lottery. In lottery you win by a small chance. For example you buy a ticket for 5$, prize is 1000$, but you have a chance of 1/1000. Lottery ticket's value is 1$, but they sell it for 5$.
3. Insurance is reversed of that. Let's take fire insurance for example, and for this thread. 1000 people buy insurance for 500$, and a cost of fire is 10.000$, and fire risk is %1. The company sells 100$ insurance for 500$ and take profit.
4. Why? Because one can not risk that much money. Insurance company just created a pool that can cover up the costs. And made huge profits just for being a middleman.
5. @CoverProtocol covers that. Now you don't need middlemans. Let's see how. Let's take fire example again.
6. There are two tokens as CLAIM and NOCLAIM in the protocol. Don't worry about the names. Think about the concept. It's like FIRE and NOFIRE tokens.
I won't mention the fees for education purposes.
I won't mention the fees for education purposes.
7. You lock 1 DAI, or 1$ in the protocol. Protocol gives you two tokens. FIRE and NOFIRE. You also need to give deadline to token. For example:
COVER_FIRE_11062021 or
COVER_NOFIRE_11062021
Which means you seek for coverage till 11 June 2021 for fire.
COVER_FIRE_11062021 or
COVER_NOFIRE_11062021
Which means you seek for coverage till 11 June 2021 for fire.
8. If there is a fire till 11 June, FIRE token will be worth 1$, and NOFIRE token will be worth 0$.
If there is not a fire the reverse will be applied.
If there is not a fire the reverse will be applied.
9. So how do we get the coverage? We sell those tokens to another person.
Let's say you want to get a coverage for fire. You go to protocol, mint FIRE and NOFIRE for 1$.
Let's say you want to get a coverage for fire. You go to protocol, mint FIRE and NOFIRE for 1$.
10. You sell NOFIRE for 0.99$. You keep the FIRE.
If there is a fire, your FIRE token will be worth 1$. If there is not a fire; well, there is not a fire why are you worried?
If there is a fire, your FIRE token will be worth 1$. If there is not a fire; well, there is not a fire why are you worried?
11. Now let's mint with 10.000$. You sell NOFIRE for 9900$, keep FIRE tokens in your pocket in case there is a fire in your house.
In other words, you just bought 10.000$ of insurance with your 100$.
In other words, you just bought 10.000$ of insurance with your 100$.
12. But why does anyone want to give insurance to me? Because of the same reasons why insurance companies give you insurance. If they think there won't be a fire, NOFIRE token will be worth the full amount. If there is no fire, they will make profit.
13. Just one thing bothers me about the project is it's on #ethereum. There are so many fees, and personally even i loved the concept, i couldn't try it out, or didn't want to give free money away to try it out.
14. I hope one day they come to #fantom network. #Ethereum gas fees are unsustainable for this to happen. @FantomFDN is a great place for this project in my honest opinion.
Thank you for reading.
Thank you for reading.
$cover
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