1/ Issue 11: Decentralized Insurance: From Babylon to Web3 βοΈπ₯οΈ
In this issue, we briefly explore the history of insurance to contextualize the progression to #Web3 parametric and mutual insurance models as exemplified by @etherisc and @NexusMutual.
βοΈ Historically, insurance was driven by community (e.g. benevolent societies of Greece). The #Web3 era is seeing a return to the community model.
βοΈ When insurance companies are gutted in favor of programmatic smart contracts, costs decline.
4/ @etherisc is an open-source, open-access platform for a wide range of decentralized insurance applications.
@Etherisc provides a platform for creating parametric insurance contracts, which relies on oracles like @chainlink to programmatically determine payout decisions.
5/ @etherisc currently has a few products out and/or in the pipeline including:
6/ @etherisc's crop insurance is particularly interesting.
@Etherisc has partnered with @Chainlink to provide parametric crop insurance that relies on local weather parameters to determine and automate payouts related to extreme weather events.
7/ A study from the Global Innovation Lab for Climate Finance found that @Etheriscβs smart contract technology reduced costs for policyholders by 41%.
The claims cycle was also reduced from 3 months or longer down to automatic payouts executed immediately following the event.
8/ @NexusMutual is a #DeFi cover protocol that utilizes a peer-to-peer framework similar to traditional mutual insurance models.
The protocol runs on #Ethereum, using cryptoeconomics to create on-chain risk-sharing pools.
9/ The entire @NexusMutual ecosystem is bound together by $NXM.
Members of the mutual can stake $NXM in risk pools for a percentage of premiums generated by individuals purchasing cover. If a covered event occurs, staked $NXM is slashed to make the payment.
10/ This model requires members of the @NexusMutual#DAO to remain vigilant with their risk assessments, but it also creates an economic game that reduces the principal-agency problem: members are incentivized to pay claims following a covered event or risk devaluing their $NXM.
βοΈ Protocol Cover for smart contract, governance, and oracle exploits.
βοΈ Yield Token Cover for insuring against the risk of a yield-bearing token de-pegging.
βοΈ Custody Cover that protects purchasers from a custodian getting hacked.
12/ #Web3 technology within the insurance vertical is reducing costs and improving the end-user experience.
@NexusMutual believes that roughly 35% of traditional insurance premiums are due to frictional costs and only 65% of premiums are returned to customers via claims.
13/ Of the 35% of frictional costs, blockchain technology is expected to cut out approximately 18% due to administrative savings and reduced regulatory costs.
14/ #DeFi is stripping out inefficiency in all forms while driving a return to community-based organizational structures.
Even traditional industries with roots in Babylon are not safe from this cleansing destruction.
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3/ But The Curation Game is where things get interesting.
The $ROBOT token, which is used for governance, will enable a form of curation mining where designers create product ideas and curators stake their $ROBOT tokens on the designs they like.
In this issue, we discuss global labor arbitrage and the #Metaverse by looking at the history of MMORPG gold farming and the future of #playtoearn gaming.
This is done through the lens of @YieldGuild, a Metaverse recruitment agency.
1/ @indexcoop, creators of $DPI, are set to launch a #Metaverse Index on April 7th.
The Metaverse has gained enormous traction as an investment theme in #crypto. Let's review some of the holdings of #MVI to see how this index captures the Metaverse space.
Enjin is an ecosystem of products that make it easy for game industry businesses to develop, trade, monetize, and market with blockchain. With over 20 million users and a robust product suite, Enjin can give businesses a competitive edge in the space.
The first decentralized world, Decentraland is controlled via #DAO, which owns the palatform's smart contracts & assets. Community events, including visits from @3LAU & @RAC, combine with #Web3 tech to create a unique social experience.