Nsure AMA with Wolf Crypto
We held an AMA with Nsure in our public Telegram channel on September 25th.
Nsure is an open insurance platform for Open Finance (DeFi). The project is inspired by Lloyd’s London, a market place to trade insurance risks, where premiums are determined by a dynamic pricing model. Capital mining will be implemented to secure capital required to back the risks at any point of time.
There are three main aspects of participation in the ecosystem for token holders -
Open market to trade risk
Nsure tokens can be used to stake on the risks that Nsure token holders feel comfortable with. Insurance premiums are paid daily, and Nsure token holders benefit from the system and leverage provided.
Capital mining
By providing capital to the Nsure Network, Nsure tokens are minted and issued to the capital providers. Token holders can 1) stake on the projects and earn premiums; 2) hold to enjoy the benefit from the growth of the system; 3) sell in the market to realize profit.
Dynamic Pricing & Capital Management
Pricing is determined by real-time supply and demand. The capital model is used to ensure claims will be paid and that systematic risk is under control.
The Nsure MVP is currently running on Rinkeby and you can play with it here -
You can also visit the Nsure Telegram channel or the Nsure Website for further details.
Here’s what Nsure’s Jeff Ren and Alex Peng had to say in the AMA.*
*This AMA has been edited for clarity.
WC (Wolf Crypto Telegram Member)
INTRODUCTION
Welcome to another edition of Wolf Crypto AMA…
Today we have Jeff Ren and Alex Peng from Nsure joining us!
TEAM & TEAM GOALS
WC
Guys, it’s our pleasure to have you here today!
Before we get into the crux of things, tell me a little about how you got into the not so exciting world of insurance and how that’s led to you guys getting involved in the much more exciting…though at times SUPREMELY FRUSTRATING world of crypto!
AP
Hello everybody!
JR
Thanks for having us here!
The Nsure story began in 2018 when Alex and I were hiking on Mt Kilimanjaro, I have been working full time in crypto since 2017 and Alex has been in the insurance industry since college.
We spent 7 days and nights together so we learned a lot from each other. Alex was a little upset that his newly launched Hurricane product was suspended by regulators for the reason of being “gambling related” just for being crypto related, when it was simply the same kind of product that can be purchased outside of our jurisdiction and has helped thousands of people who are farming and manufacturing.
The original idea was to build an open platform for anyone to exchange and share risks. The gap between real world and crypto space was still huge at the time.
Early 2020 when the BZX hack happened and we saw Nexus Mutual successfully pay out the claim, this inspired us a lot, as Nexus Mutual had successfully decentralized the structure of a ‘insurance company’. We learned a lot from the design but we also found much room to innovate.
The things we think can be improved is scalability. With the Nexus Mutual’s bonding curve there is less room to scale fast enough to meet the demand of value locked in DeFi.
That is how and why we started Nsure.network.
WC
Thank you for the intros guys.
Could you also give us some background on some of the team members who aren’t joining us today?
JR
Sure, our core team is composed of multiple backgrounds —
Leafan Chan is our Lead developer and has a strong background in Project Management, smart contracts and public blockchain development. He also has 10 years’ C++/Golang relevant working experience, more than 3 years blockchain experience and formerly led Sangfor’s cyber security team of 40+ devs.
Alvaro Fernandez is our Strategy and Growth lead. He majored in Economics & Finance, and recently joined the Venture Capital scene. He was previously Vice President and Managing Director for Europe at JRR Group and prior to that was the Investment & Incubation Manager at ChainFunder. He has also provided strategic consulting for institutions such as DBS Singapore, and the Italian Undersecretary of State for the Ministry of Economic Development.
Gherardo Lattanzi is our Operations manager, and was previously a Crypto Data Analytics & Ecosystem Developer with OceanProtocol. He has a Data Analytics and ML certificate from Ubiqun Code Academy as well as a degree in International Business Trading and Development.
Vincent Bauwens is our Marketing guy, He has a Msc. in Finance and Business Engineering and is also a Co-Founder of several companies and ecommerce brands. He is currently managing a marketing agency and has 5+ years of experience in marketing & business development and early stage investments in the blockchain industry.
THE NSURE NETWORK
WC
So let’s get right into it guys, what’s your elevator pitch on what Nsure is and why we need an insurance product like Nsure in a crypto world full of smart contract bugs, rug pulls and bad actors?
JR
Since inception of the concept of risk-sharing and insurance, it has been clear what the benefits are for individuals and companies to be able to calculate risks; up to the point that it has become one of the most established industries and core concepts in the society we live in.
Crypto has proven to be innovative in numerous ways; yet as it evolves, and products increase in complexity and insurance is a concept that is still vastly unexplored in the crypto space.
DeFi has proven to be an industry segment which is tailored to coexist with products that can allow you to calculate and share risks as smart contract bugs and exploits are a clear threat to it’s users.
With Nsure, we aim to establish new standards for the concept of insurance in this industry, applying many of the core concepts that have been proven to be efficient for centuries outside this space, such as the Lloyd’s London marketplace and Dynamic Pricing Model for policies.
Once adapted to the decentralised nature of Blockchain, crypto users can take enormous advantage of the benefits of being insured and have the ability to calculate/price in the risks towards their exposure.
WC
For those who might not be aware of Lloyd’s…
Founded in 1686, 334 years ago…they would have seen some things change in their time!
I’m interested to know Alex, with your background in traditional insurance, what do you see as the main commonalities between the legacy world of insurance and the crypto world…and what are the main points of difference for you?
AP
Throughout human history, we’ve always been trying to find opportunities that could deliver high returns, like the prosperous trade relationships between Eurasia and America during the Age of Discovery in the 16–17th century.
However, high returns tend to come with high associated risk, for example a ship owner could face huge losses if his ship with full cargo sunk, therefore there was a strong demand to hedge the risk and smoothen the financial estimations in the case of adverse events.
Innovation has led insurance and other financial products to be developed to handle these risks professionally, helping our community to grow further. Such demands are also very strong in the crypto world.
There are of course a lot of differences, including but not limited to —
1) The history of the crypto world is much shorter, especially DeFi and as such the data available for actuary analysis is limited, which is the main reason why such coverages are not offered by traditional insurance companies, and the protection gaps of these newer risks will remain unfilled for a long time.
2) The transparency is much higher in the crypto world, as all data, parameters and mechanisms are shared and all members are able to contribute themselves for the further development of the community.
3) Unlike the centralized industry, where price is set by huge companies and a large portion of premium is paid to cover their internal costs, insurance in the crypto world can allow for price discovery via supply and demand, and the loading for internal costs would become almost insignificant. This results in much cheaper and more efficient premiums.
WC
Again, coming from a traditional world, I’m also interested in your general thoughts on DeFi before we get too far into this, since your product is kind of like a safety blanket for the wild wild west of the DeFi ecosystem…
What drew you into DeFi and where do you see the space headed in the next few years? And of course, how do you see demand growing for products such as yours along the way?
AP
As Jeff and I mentioned earlier that the gap between the real world and crypto space is still huge in the insurance space as very few insurance companies would offer insurance for Defi projects and that is exactly what the decentralized insurance platform should offer. In my opinion the DeFi industry is not a bubble but has a solid foundation and we are only in the beginning of this era.
Compared to legacy world the percentage of covered business is about 5–10% we would expect a 500 million — 1 billion user market, based on a 10 billion locked value in DeFi. The industry is obviously much smaller than that right now, so there is huge room for growth there.
At the same time, Nsure is targeted to be a platform to trade risks, therefore more less-correlated business will be introduced to deliver higher returns to token holders at community’s vote. Natural disaster risks are one good area to study and brought in the near future. There are huge protection gaps in the legacy world of insurance, especially for these less developed areas, where the crypto world could offer cheaper and insurable products, like “Shake and Pay”, “Flow and Pay”, “Rain and Pay”.
WC
Now I usually don’t cover competitors this early in our AMA’s but for this particular one I think it’s probably necessary as it would certainly help get a better understanding of your product and the way it differentiates itself from…NXM…
What are your thoughts on NXM and why have you chosen to go up against what could probably be considering an industry incumbent in that niche now?
AP
We think NXM is very innovative, they are the pioneers in this market and they are very successful, we might look for cooperation in the future.
Because as most people have asked the same question, we actually have a comparison chart that compares the two directly.
Let me post it here -
WC
Wow, that’s quite the list, let’s break this down one by one…
Explain to me what a “Shareholder Style” is and why that’s better…or how it’s different to, the “Mutual” style of NXM?
AP
There are two types of insurance companies: Mutual companies that are owned by policyholders, where capital and risk are shared by all their members; and Shareholder companies, which are owned by shareholders and capital is raised from investors rather than policyholders.
According to the National Association of Insurance Commissioners, shareholder insurance companies held about 78% of the total cash and invested assets in the US at the end of 2013. Only 18% of those assets were held by mutual insurers.
The main reason is that it is easier and more flexible for “shareholder” companies to raise capital, allowing for more rapid growth by expanding to more products or countries. In addition, there are also more incentives to develop better products and services for clients, as well as reduce internal cost to deliver attractive returns to investors.
WC
So a market traded price would just be the last traded price?
I assume this also plays into the pricing model you also have on the comparison chart?
AP
Rather than a single centralized entity setting up a premium rate, or individual capital suppliers and policy holders having to negotiate over premium terms, Nsure uses the Dynamic Pricing Model to set the price, based on supply and demand, the tokens backed and the policies bought.
Compared with NXM, premium rate is determined by capital supply only, which may result in less capacity if the pricing was set up too low and less demand if the pricing was too high. When a model tracks both supply and demand, the market will adjust itself.
The model has the following pattern —
1) When capital supply is high, i.e. more power is backed for a risk, the premium rate will be low;
2) When demand is high, i.e. more policies is sold out, the premium rate will increase;
3) As more token are used to back a risk, i.e. more popular, less volatile of premium rate change is, and vise versa for a less popular risk, the premium rate will be sensitive for large demand change to avoid pricing errors.
WC
I’m assuming with this dynamic pricing model, you’ll end up having some premiums that are cheaper on your platform than others, but also some that may be more expensive?
Is equilibrium there simply found by the old supply and demand theory?
AP
Right.
Given the fact that the NSure network is not owned by a company, but rather a decentralised structure that belongs and is governed by the community being the capital providers, policyholders and token holders, the pricing is set for discovery according to supply-demand equilibrium.
WC
“Capital Mining”, this is like liquidity mining…or something different?
AP
The concept of Capital Mining is actually derived from the traditional insurance model and its demand of needing a capital pool to function efficiently. As an innovation, we decided to merge this with the concept of liquidity mining which has been broadly used in the recently booming DeFi segment, as it allows us to provide additional incentives to capital providers, while being in perfect synchrony with our token model and utilities.
This allows NSure to have a boost from day one in regards to the capacity of provided policies, while acting as a safetynet for the protocol, all aligned with the incentives of policyholders, shareholders and capital providers.
WC
While we’re on that, explain to me what a “Capital Pool” is on Nsure and what that actually consists of, asset wise?
AP
The Capital Pool can be perceived as a reserve to ensure that the MCR target, in case of successful claims and unpredicted events is met. Insurance is closely tied to statistics and probability, and while the main capital for claim payouts is originated from the Surplus pool, the Capital pool allows for deviations to happen and to be covered in case of unpredicted events, becoming an additional safety layer for policyholders.
If the surplus pool does not cover the MCR target, part of the Capital pool will be temporarily locked until health is restored in the network and the MCR is covered entirely by the Surplus Pool.
In addition, due to the liquidity mining mechanics, it can be seen as an incentive layer for capital providers to become active participants in the network by obtaining NSure tokens as reward; similar to how AMMs and other decentralised exchanges and farming protocols act, together with their estimated APYs.
As for the assets, multiple assets will be accepted, such as Ether, DAI, USDT and USDC.
WC
In a similar vein, what is your “Surplus Pools” and “Claim Reserves” actually made up of…and what purpose do they serve?
AP
As for the Surplus pool, it consists of 40% of every premium paid for coverage, including past and expired coverages. This pool is the main source of funds to cover any claim approved by the network. It’s target is to remain above the MCR requirements of the network while providing coverage to claims.
When the surplus pool is above MCR, governance can decide upon the usage of those profits in the system, such as for executing a buy-back and burn of NSure tokens.
Claim Reserves represent 10% of each premium paid for coverage, and is split equally to incentivise both community, and professional assessment during our 3-phase voting structure for claims. If not utilised, this 10% will flow back into the Surplus Pool.
WC
The risk assessment part of this is one that I’m particularly interested in, as that is what insurance is right? Assumed or implied risk?
Explain to me how you assess, enforce and penalise risk on your platform?
What does a “Nsure Risk Profile” look like?
AP
Glad you are interested in it, cause it could provide you additional return. Underwriting or risk assessment is one of the most important functions for an insurance company.
Nsure holders can do the study and stake on different projects to earn 50% of the premiums at a linear release. However, if a successful claim is processed, 50% of the claim amount, equivalent Nsure tokens stake on it, will be burned proportionally to share the loss.
The total tokens staked on a project determined the pricing of such risk. As the pricing is dynamic, you might want to stake more if you consider the risk adjusted return is more attractive along with the high demand, and you might want to withdraw if the pricing drops because of less demand.
The overall staking power is determined by the Capital Model, which takes into account the correlation between different projects. Nsure holders can choose to stake on un-correlated projects to obtain leverage on their capital, thereby earning more premiums.
WC
What’s a capacity limit and how does this apply to users interacting with the platform?
AP
Capacity limit is the cap for each product offered in the platform to cover risk. It determines how much risk can be absorbed and covered sustainably, without overexposing the Surplus pool and policy holders. The Capacity limit on NSure Products is set at two times the amount of staked tokens on that specific product.
However, given the Dynamic pricing model, and price elasticity, as a product gets closer to reaching full capacity, the price for each unit of cover would increase, and vice versa. This allows each market participant to decide whether it is worth for them to pay the current price, as well as for stakers to be additionally incentivised to stake more on that specific product, given the increased returns sourced from the paid premiums.
All in all, the Capacity limit together with the Dynamic Pricing model allow it to have free market balance to be achieved and adapt according to any events.
WC
What about max stake?
In fact, while we’re on it, how about you explain to me the staking dynamics on the platform and this correlates with both assets and insurance premiums on the platform?
AP
The maximum stake amount reflects the allowed capacity one user can bear when being a risk-taker. As a token holder, one can utilise those to stake into products one feels comfortable with in order to obtain revenue from premiums being paid.
If a user chooses to stake on non-correlated products, the platform grants the user a certain degree of leverage on those tokens to also stake on other products which are not related to ones already chosen, which would enhance the profitability over your staked principal. This concept is derived from traditional insurance companies, as they can leverage their capital by providing coverage of non-correlated products such as flooding and car accidents.
As for the correlation, an increase in staked tokens on any product would impact the Dynamic pricing model in such a way that the cost of obtaining a policy would decrease marginally, given the increased supply from risk-takers.
WC
So past staking NSURE tokens as collateral, is there any reason for a user to stake tokens on the platform?
JR
Besides staking as a risk-taker, users stake their tokens for a short period of time to participate in the voting process of claims and it’s associated rewards.
In addition, NSure tokens are the native unit of account for governance rights within the network and DAO, granting users that own NSure a voice in participation for decisions made by the DAO.
WC
So you stake NSURE tokens for collateral, but how do you actually pay for premiums?
It’s not with NSURE tokens is it, just to be clear?
JR
As mentioned previously, premiums are paid in a choice of base currencies, being Ether or Stable Coins such as DAI. Premiums are requested to be paid in the same currency that the payout would be, in case of a successful claim during the coverage period.
The Nsure tokens are not paid for cover but from the surplus pool first and from the capital pool for the remaining part, if needed.
WC
What are the actual assets you can participate in on Nsure?
From trialing the Rinkeby demo, I see you have Balancer and Compound already on there, and YFI, Aave and Uniswap are greyed out for now…so I assume they’re coming soon?
JR
Displayed products on the demo such as the ones you mention are products we have already in consideration and currently in works to bring live together with our mainnet lunch.
As we grow, we are looking to implement further tailored products.
WC
Past the initial release, what will be the process for adding new assets onto the platform?
Is this where governance will play its part?
JR
One of the features for Governance participants will be to propose and vote on potential implementations of new products onto the platform, yet it will be tied to review of the risk profile of each and will likely need input from professional actors at the beginning.
WC
We’ve spoken a lot about the lead up to it, but what actually happens, process wise, once a claim is made?
How is it decided and how is it paid out?
JR
Currently we have drafted the mechanics for the claim proposal and voting to be off chain, similar to COMP governance structure, with Metamask integration as verification, further on posting results on chain for saving on gas fees for the user.
Yet, some of the DAO and governance components are still on the works and may consider modifications in the future. As the industry evolves and new scaling solutions for on-chain governance emerge, we would increase our aims to push for full on-chain decentralisation.
NSURE TOKEN UTILITY
WC
We briefly touched upon some of the NSURE token utility in the previous questions, but how about you give me a bullet point summary of the various use cases within the Nsure ecosystem?
JR
The core utilities of the NSURE token are -
- Provide capacity on insurance products to obtain profit from premiums (staking)
- Participation on voting process for claim approvals (staking)
- Core of Nsure governance model
- Derived profits from surplus over successful insurance “business” over time (derived from governance)
- Dividend for capital providers on the Capital pool (capital mining)
- Distributed to policyholders as added incentive (capital mining)
WC
So why have you chosen to use your own token as a method of base collateral, rather than using a more widely used…and perhaps, stable, asset?
JR
The design already has a surplus pool and capital pool to cover all the policy sold. Voting has an important function as ‘underwriting’ and we believe it should not simply be defined on how much capital you have but rather be given with the rights the Nsure token represents.
WC
We can’t end this section without talking about governance…as someone who has been historically anti-government, I seem to find myself in endless discussion on government and governance methods these days…
I’d love to know a bit more detail as to what your style of governance will be, what’s required to participate and what actual decisions can be made on the platform?
And of course how this relates to access and ownership of the NSURE token?
JR
In a nutshell, once our governance structure and DAO is deployed, it intends to allow participants to have a voice and make decisions over the overall direction and parameters of the platform.
From very specific actions, such as voting over how to allocate surplus/profits resulting of the core insurance model, to choosing which members are part of the Agency Assessment committee; to a broader scope of governance like deciding on any future implementations, adjustments over liquidity mining, or use of funds allocated to the Foundation (10% of total supply).
As you see, ownership of NSure token is at the core in order to allow governance to happen, enabling influence over accessibility over the token itself.
WC
So by participating in the voting process, token holders will share in a 5% revenue share of the premiums right?
This is split proportionally based on the amount of votes you have/NSURE tokens you hold?
JR
When a claim is proposed by the policyholders who voted, the 10% of the (already paid) premium that was reserved for this purpose is taken as a reward pool for this specific claim process.
5% as we know is allocated for the agency assessment committee, while the other 5% is reserved for the community that engages in the voting. The split is proportionally based according to the amount of tokens one stakes into this specific vote.
NSURE REVENUE MODEL
WC
That’s probably a really good segue into how all these token mechanics work to serve Nsure itself, past the users of the network.
So what’s the revenue model past selling NSURE tokens and how do the aforementioned token mechanics work into the model?
JR
As briefly mentioned at the beginning of the AMA, NSure derives its structure from the Shareholder model and LLoyd’s London marketplace to trade insurance risks. While those are based and evolved as centralised structures (insurance companies),
NSure is placing these concepts on a distributed nature. In other words, it’s not a company seeking for profitable models to offer insurance and risk coverage, but rather the users and token holders themselves who benefit out of the model. The above mentioned token mechanics and incentives are a key component to achieve this adaptation.
By framing a risk market place in such a way, it allows users not only to be outsourcing risk, but also becoming the risk-takers, capital providers, governance actors and auditors of the system, allowing them to be the ones benefiting out of any value generation resulting from the platform and model.
NSURE TOKEN SALE & SUPPLY
WC
Before we get into the token sale and supply stuff, I see you recently ran an airdrop campaign.
What was the details of that and what was the community response…it seems we’re in peak airdrop season right now, so I’m assuming it was pretty good!
JR
Right!
This airdrop was our first move to give back to the community that has been following since the early days. It was framed as a Quiz Airdrop and in order to become eligible you had to be qualified among participants that had 100% correct score on the Quiz.
Submission time was a factor, as only the first 180 participants meeting the requirements would be able to obtain a spot as winners. First 100 would share a pool of 50.000 NSure tokens (500 tokens p.p.), 101st-300th spot would have 50 winners selected at random to share a pool of 25.000 NSure tokens, and 301st-500th spot to share 15.000 Nsure tokens among 30 randomly selected winners.
Within a few minutes we reached the cap of 500 quiz submissions meeting the requirements and by the time we closed there were 1200+ submissions. A very pleasant surprise of how active and engaging the community reacted. This said we want to appreciate everyone who participated and hope you enjoyed the challenge!
WC
Can you data dump me your full token metrics please?
JR
WC
So doing some rough math here, your day one market cap will be under a million USD from the looks of things?
JR
Speaking at private sale valuations, the initial circulating supply of the token would be below 10% of the total supply, putting the market cap under a million USD, correct.
WC
Very very juicy…Just let me check the NXM market cap…
Would you look at that…
At what point do capital mining tokens start getting unlocked and at what rate?
JR
For now the minting speed is 2 NSURE per ETH block which is about 11520 per day but this is not fixed as we want to monitor the token price at the day we launch mainnet to attract enough capital to bootstrap the system.
WC
I see there is a small public sale listed there. Can you give me some details as to when and where?
And how users will be able to participate? Is it FCFS or a bonding curve etc?
JR
Please stay tuned we will publish the info soon.
WC
What’s the total amount you’re raising across all sales and at what valuation?
JR
We have raised $50k USD at seed round and $1.4 million USD from the private round.
WC
As a DeFi project, this means they’ll most likely be Uniswap in your near future…
Will NSURE be listed on Uniswap initially and if so are you going to incentivise liquidity providers on Uniswap?
JR
Once the time comes and the public sale is concluded, we will allow for trading to happen on AMMs, and Uniswap is definitely a requirement at this point in time.
We will add initial liquidity in order to allow for the smoothest possible experience for any users interested in trading NSure tokens.
As for now, we have not made any comment on whether NSure will have additional incentives for liquidity providers on Uniswap, apart from the ones that Uniswap themselves have already implemented, mainly trading fee revenue.
WC
I hate to be this guy but, when CEX? (I don’t care but some do!)
JR
We have established communication channels with main CEXes in the space and are in close talk, as we believe our users and community would benefit out of having centralised marketplaces as a choice.
Likely after public sale and DEX trading is enabled, we will announce about any CEX listings in due time.
DUE DILIGENCE CHECKS
WC
Does Nsure have a Github?
JR
We sure do —
WC
Where are you guys based?
JR
We are divided across Europe and China, having our Tech-team located in Shenzhen, Research and Operations divided among Shanghai, Shenzhen and EU
WC
Where is Nsure incorporated?
JR
Like many blockchain compares we are incorporated in the BVI.
WC
Do you have a legal opinion that your token isn’t a security?
JR
Yes we do!
WC
Has your token already been minted? If so, what’s the address?
JR
For our testnet and beta release we have a token contract issued on Rinkleby, yet on mainnet we have not released the contract for now.
WC
Has your token smart contract been audited and can we see the results?
JR
Not yet but our token contract is a little bit more complicated than normal ERC-20 tokens since we plan to implement the DAO.
CLOSING THOUGHTS
WC
Thanks for your guys time today, I loved learning more about your project and and I CAN’T WAIT to see a $1m market cap competitor to a $280m market cap project hit the market..should be fun!
JR
We are so glad that we got so much covered, thank you all for having us here!
Nsure Resources
Website: https://nsure.network
Telegram: https://t.me/nsurenet
Twitter: https://twitter.com/Nsure_network
Medium: https://medium.com/@nsure_network
Github: https://github.com/nsure-tech
MVP: https://buy.nsure.network/#/insure
Whitepaper: https://nsure.network/Nsure_WP_0.7.pdf
Wolf Crypto Resources
Public Group: https://t.me/WolfCryptoPub
News Channel: https://t.me/WolfCryptoAnnounce
Twitter: https://twitter.com/WolfCryptoGroup
