In this episode, Bobby Ong, co-founder of CoinGecko is joined by Oliver Xie, founder and Project Lead of InsurAce. Bobby interviewed Oliver on the background of InsurAce, their products, their advantages compared to Nexus Mutual, as well as InsurAce’s upcoming plans for 2021.
[00:02:56] What is InsurAce?
[00:06:58] InsurAce’s product launched on Ethereum
[00:08:15] Competitive advantage against Nexus Mutual
[00:11:47] Portfolio-based coverage
[00:19:00] What is InsurAce’s Investment Portal?
[00:24:26] Plans for multi-chain insurance service
[00:30:01] Claim process in case of hacking event
[00:36:55] Upcoming plans for InsurAce
Quotes from the episode:
“What we can provide is a portfolio-based coverage. So that means that you can cover a basket of different assets or DeFi protocols in one shot.” [00:09:28]
“It's just like sometimes when you're taking a flight, right. So you can either choose to take a flight insurance or you do not. But most of the time, I think everybody would just by default, they would just choose to buy the flight insurance. So in this way, I think it's similar.” [00:22:17]
“There is a saying that goes like, you will always need to work for the best but prepare for the worst.” [00:36:15]
Watch the Podcast on YouTube
InsurAce - https://www.insurace.io/
CoinGecko - https://www.coingecko.com/
InsurAce on CoinGecko - https://www.coingecko.com/en/coins/insurace
Bobby Ong [00:00:00]:
Welcome to the CoinGecko podcast. I'm your host, Bobby Ong. Each week we will be interviewing someone from the blockchain industry to learn more about this fast moving crypto currency economy. If this is your first time listening then, thanks for coming. The CoinGecko podcast is produced each week to help you stay ahead of the curve. Shownotes can be found at podcast.coingecko.com. I highly encourage you to join our newsletter where we send out top news in the crypto industry every Monday to Friday. Come back often and feel free to add the podcast to your favorite RSS feed or iTunes. You can also follow us on Twitter and Telegram at CoinGecko.
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Bobby Ong [00:01:20]:
Welcome to the CoinGecko podcast. For today's episode, we have Oliver Xie, Founder and Project Lead of InsurAce, a decentralized insurance protocol. If you're watching this video on YouTube, we at CoinGecko really appreciate it if you hit the subscribe button below and follow us. So yeah, a little bit about Oliver before we start this podcast, Oliver started work on InsurAce back in September, 2020, and prior to that, he was working as a CTO in one of the three largest Singapore-based, licensed derivative Exchange and Clearing Houses. Oliver entered the crypto space back in 2017, when he led a team to research crypto derivatives and blockchain technology and has gravitated towards blockchain-based Open Finance for the past few years. He identified an opportunity for unique approach to providing insurance for DeFi smart contracts and users, and InsurAce was created. So very good to have you on the show, Oliver. I know I remember meeting you back in Singapore a few years ago when you were back in your previous job at the exchange. So very happy to see that you've transitioned fully from TradeFi into DeFi. So very happy to have you on the show, Oliver.
Oliver Xie [00:02:43]:
Thank you, Bobby. Thanks for having me today. It's really been a pleasure to be here on CoinGecko and hope we can have a good session today, to share all the things about InsurAce and share the things in the industry. Thank you, Bobby. Yeah.
Bobby Ong [00:02:56]:
Yeah, I'm sure we have a lot of things to discuss and learn. So I guess to start right, Oliver, maybe you can give us the listeners here at CoinGecko podcast, a simple explanation of what is InsurAce and what do you do at InsurAce?
Oliver Xie [00:03:09]:
Yeah. Sure. So probably you guys can just tell from the name InsurAce. You can say that this is actually a DeFi insurance protocol, so definitely there are, you know, many different sectors in a DeFi space. There are many borrowing, there are decentralized exchanges, there are yield protocols, but what we do is on the insurance side. So to put it simple, InsurAce is a DeFi insurance protocol. We aim to provide reliable, robust, and carefree insurance services to other DeFi users. So basically we offer insurance services to cover a wide array of different risks, such as Smart Contract Risk, Centralized Exchange Custodian Risk. And recently we add in the IDO Event Risk. So all this risk coverage are based in, you know, margin context. So our unique product are, the portfolio-based coverage and also we are going to launch the investment portal soon. So with all this together, we are going to offer a DeFi insurance protocol with the investment capabilities. So basically that's what we do from the product side. And also in terms of our investors, we are backed by DeFiance Capital, Parafi Capital, and also Alameda Research, HashKey, and a few top crypto funds as well. And our community is very strong. We have one of the best communities and we will continue to provide service and innovate for our community.
Bobby Ong [00:04:34]:
That's amazing to hear, man. Before diving further into InsurAce, right, I've liked to learn more about, a bit more about your background, right? So when I met you a few years ago, you were the CTO at one of the large Exchange and Clearing House in Singapore. I mean, it's pretty good job in a traditional finance. I know you were interested in crypto even back then. That's the whole reason why we met. But how do you end up like, you know, making a move to crypto full time? Why do you do this? It'll be interesting to hear your personal story on this.
Oliver Xie [00:04:59]:
Yeah, sure. I think the time we met was like back to 2017. I think that was the first time when Bitcoin, you know, hit like 20K. That also, you know, the Bitcoin and Ethereum are out from the crypto space into the eyes of the mainstream. So from there onwards, since I was working in a traditional recognized exchange, so we have to pay attention to those new trends in the market. So I made a team there, you know, to start working on research on the crypto assets and also the blockchain technology. And in the past few years we were trying to bring the cryptos into a regulated environment, but due to various kind of reasons, it wasn't, you know eventually you know, came true. But during the process I knew a lot of knowledge about cryptos and also the blockchain technology since I was a CTO. And also I know, get to know other friends in the industry. And eventually I really, you know find the kind of passion that in the crypto space and also the innovation.
So as a technology person, you know, I cannot help myself just keep working on the cryptos and blockchain technologies and seeing how blockchain technology came to, you know, influence the traditional financial industry. In fact last summer in 2020, when the DeFi summer begins, it has really opened a new door for every one of us. So there are various kind of a new finance applications and it was really, really bringing real values into the financial services. So that actually, I think is a good combination of my personal passion as well as my expertise. So from there onwards, I was really kind of involve into DeFi. And eventually I think I found that maybe it's time for me to start full-time and build my own project.
Bobby Ong [00:06:40]:
Yup. That's a good story to hear, man, like everyone kind of get down a rabbit hole. Like once you start going into crypto, you realize there's so much innovation and how fast things are moving and then back in your old job, like corporate setting, like it's really hard to get anything out. So yeah, just DeFi just moves in like top speed. Yeah.
Oliver Xie [00:06:56]:
Bobby Ong [00:06:58]:
So, let's talk a little bit about insurance product that you launched, InsurAce. You launched it on Ethereum recently, I'm not so sure when exactly that you launched, but it would be interesting to hear. And how, kind of the initial traction that you have so far on this Mainnet product that you have launched so far?
Oliver Xie [00:07:14]:
Yeah, we actually launched our Ethereum Mainnet back to April 26. So our first launch was on Ethereum Mainnet and currently, I think it's around one and a half months away. So during this, we have our product has been you know, developing very fast. We offer, you know, multi-chain insurance, and also IDO insurance. And till today, the total cover we have sold is around $22M. And we have earned around $70K of total premium, which looks like, you know, still a very small amount, but I think we are growing very fast. We're working on right, you know, direction. So that's pretty much what we have achieved so far on the product side. And also, I think I forgot to mention that we actually, currently, we have provided coverage to over 40 different protocols. Some of the big protocols, some of the new, and some of the smart medium camp protocols. So I would say we are gradually becoming one of the most comprehensive insurance platform in a industry.
Bobby Ong [00:08:15]:
That's good. So, I mean, you mentioned that you guys recently have about $22 million worth of active cover so far in about one and a half months since you guys launched. I guess the biggest insurance provider in the space is Nexus Mutual. Last I checked, they had about $620 million in active cover amounts. That's kind of like about 30 times larger than you. Obviously they've been around for last two years. I'm interested to hear from you, right, what do you think is the biggest differentiator or maybe competitive advantage that you may have over Nexus Mutual?
Oliver Xie [00:08:45]:
Yeah, sure. And this basically as in Nexus Mutual is still, you know, the leading in player in the insurance sector. And we definitely respect them because I think they have made many, you know starting moves for the insurance sector and many of their practices has been adopted by many subsequent followers. But again, I think we still have a lot of unique value creations we have compared to them. First the unique portfolio base, the coverage. So basically what Nexus Mutual provide is a single protocol-based coverage, whereby let's say, Bobby, you have a big bag of different crypto assets, but let's say you want to get insured, so each time you have to ensure one of your assets or one of your DeFi farming protocols. But that said, what we can provide is a portfolio-based coverage. So that means that you can cover a basket of different assets or DeFi protocols in one shot, which will save your operation time, save your premium and of course, save gas fee. So that's one of the unique operation, advantage we can offer. And then, second one is our mining program. So what we do is an aggregated pool of staking. And whereby Nexus Mutual is a per protocol pool. So definitely they have their advantage, but what we can offer is first one, it is higher APY plus in bigger capacity for insurance. So let's say if sometimes if you use Nexus Mutual product, you'll find that, you know, for many of the protocols, it just doesn't have enough capacity.
That's because their staking pool is separated. Each protocol has its own staking pool, but our platform, we're an aggregated pool whereby we share the capital among other protocols. And so in that way, users will be easier to, you know, just to stake and they do not need to care all the details at the backend or at the same time they can enjoy the APYs. And also at the insurance side every protocol will have a much larger capacity. So I think that were eventually benefit the users. I think the third one is we'll have an investment portal, which the investment portal and the insurance portal will work together in a synergy. So the insurance, you know the free capital in the insurance side can be used to invest in an investment side, whereby the investment side, since we have the investment returns, will come back to insurance side, you know, to further subsidize the users there of higher APYs. So these two arms are, you know, kept walking in a quite [inaudible] synergies. I think the last one is more on the token side. So, I think you guys have seen that Nexus Mutual has a bonding formula for their token price.
Bobby Ong [00:11:15]:
Oliver Xie [00:11:15]:
And also they have a membership, so you have to do KYC and we're about definitely fast, we do not have KYC and there are tokens can only be transferred among the KYC-ed memberships. But for us, we do not have such kind of restrictions. So our tokens can be trade more freely and can be, you know, list on exchange, can be transferred among the token holders, more friendly. And so that's pretty much, I think we are providing a more open, more inclusive way of doing insurance. Yeah. I think these are some of the key differentiators we have.
Bobby Ong [00:11:47]:
Hmm. It's interesting how you mentioned how, like in Nexus Mutual users have to stake individually for each different products. So they have to stake for Yearn Finance, for Alpha Homora, for Binance, Coinbase, and then the interest rate on premium on this product goes down as more people stake, but what ends up happening is that there's not enough people staking it because the premiums are low enough. And so there's no enough capacity. Whereas you guys take a more portfolio-based approach and there will be capacity. So I've got a few questions coming on from there, right. So, and then you also mentioned Nexus Mutual, you got to buy insurance for each protocol specifically, so you gotta buy insurance for a year and have to buy insurance for Alpha Homora, Badger and so on. So you're saying that on InsurAce, if I were to buy insurance, I just have to decide, like, I want to buy a hundred thousand dollars of insurance for one year and it covers all this 40 protocols, or do I have to select the protocols that I want to be insured? Like, I would like to have five different protocols and then it calculates the price for a hundred thousand dollars premium for a year, for example.
Oliver Xie [00:12:43]:
Yeah. So for the portfolio-based coverage I mentioned, so portfolio means that you can select either one or multiple, so it doesn't necessarily need to be all the 40 protocols as a combination. But again, you can choose one product, like Yearn protocol, you can just insure for it. At the same time, we have the flexibility that you can insure for multiple protocols, YFI plus Curve, because these are good combinations together. And also let's say you want to ensure Alpha Homora. Alpha Homora has different versions, V1 on Ethereum, and V1 on BSC and V2 on Ethereum. So they have different versions on different chains. So you can also put them as one portfolio and insure them together. So portfolio is more flexible. Yeah.
Bobby Ong [00:13:25]:
And would it be like, say, like, for example, the lowest rate on Nexus Mutual is 2.6% for like the SAFE protocol, right? So if you were to buy two protocols, you have to pay 2.6% and 2.6%, which should be roughly 5.2%. So would it be correct to say that on InsurAce, if I were to buy a portfolio like two portfolios, it will be cheaper than on Nexus Mutual?
Oliver Xie [00:13:47]:
Yeah, definitely. Yeah. That's one of the major benefit of a portfolio-based coverage. Of course, first one is that you can cover multiple products in one shot, but on the pricing side, you will enjoy much cheaper premium overall. Let's say you got two, Curve and YFI. Each one of them is 2.6%, but these two combine together. They can save around like, 20% plus of premium. And also don't forget about the gas fee. So if you buy it two times instead of with just one transaction, so that will actually save a lot of costs. I actually personally did a comparison that, yeah, let's say if we ensure around four to six protocols all together, and these are all the big protocols, and so in that way we can save around at least 30% of other premium. But let say if we put in some new protocols, because normally the new protocols are, you know, more risky, right? So their premium is kind of a higher, but let's say if we put some of the low-premium one and high premium ones together as a portfolio, then you will save even more premium. So that's one of the major advantage of the portfolio-based coverage. Yeah.
Bobby Ong [00:14:56]:
So educate us, enlightened us, right. So what are the kind of premiums that we can kind of expect for one protocol coverage on InsurAce at this point in time? Like for the safest one, let's just say, like, I don't know what's the safest one, maybe Yearn or I don't know, yeah. Maybe you can tell me about it.
Oliver Xie [00:15:11]:
Yeah, for these ones, like Aave, like YFI, they're basically around 2% or 25%. That's the lowest. Yeah, but if you put them all together as one portfolio, you definitely, you know, get much, much cheaper premium. Yeah.
Bobby Ong [00:15:26]:
So I was looking at, your mining portal as well. So at this mining portal you accept ETH, wETH, USDC, USDT, among other things, that the interest on these things are roughly around, I saw about 14% for wETH and about 11% for USDC and USDT. I was reading it, there was a disclaimer at the bottom in a sense that if there is a hack on one of these protocols, basically the people who mine or stake the ETH or the USDC might see them having a haircut on it, right. Because you are basically ensuring the other users who are buying premiums on Nexus Mutual. Is that correct?
Oliver Xie [00:16:00]:
Yeah, so basically this listing will come in, you know, to underwrite the insurance risk. Then let say, if there is a claim payout happens. So we will, you know take a portion of this balance from staking pools, you know, for the claim out, at the same time, we have another, you know tranche for the claim payout, which is from our premium pool. So we will use a premium pool as a first transfer claim out first, if that's not sufficient, then we will come back to use the staking pool for a claim. Yeah. That's pretty much how it works. Yeah.
Bobby Ong [00:16:32]:
But the premium will be, I mean, will not be much, right, because I mean the premium will accumulate over time and then you'll go to a pool, but if that's not enough, then those who stake may see them getting a haircut, right.
Oliver Xie [00:16:42]:
Yeah. Yeah. They got a haircut. So that's why we keep reminding people this risk, but, you know, just because recently the whole market just plunges. So, so like ETH, like even our tokens, you know, the prices drops a bit, so that APY drops a bit, but personally we can offer around like over 30% of APYs. Yeah. So in this way we can provide higher APYs for stakers to make sure that they are comfortable, you know, just staking. Yeah.
Bobby Ong [00:17:09]:
I think for the ETH one, I mean, off my head, I mean about 15%, I mean, 11 to 15% ETH, wETH coverage, I think that's fair for ETH, but for USDC, USDT, I think that's gonna be challenging to attract capital, right? I mean, 11% for USDC, USDT, a lot of people can get 30% stable coin returns, and even higher, especially if they move to Polygon. So I don't know if you've faced any challenge getting capital from people to stake in the stable coin.
Oliver Xie [00:17:35]:
Yes, I would say there's definitely a challenge. So of course, in a vast DeFi, you know, space, there are definitely a lot of crazy APYs, several hundred of APY and you know, 30%, 50%, that's very common. But, you know, our philosophy we think that crazy APYs is definitely not sustainable. So we are not, definitely not going to, you know, offer very crazy APYs. But again, what we want to see is that we'll offer a competitive APYs to the users that are willing to stake in. At the same time, once our premium pool grows, we will definitely share a portion of the premium to this these people who stake in. So that will create extra yields and and plus in the future, our investment pool, investment arm launches that will, that will create another source of you know, returns. So all this combined together, it will definitely overhead returns and also the premium return in the investment, I think there are kind of a sustainable. So, because let's say if you are just, you know, reward the token that is taken with your native tokens, but eventually you will fall into a dilemma. The multiple reward, the hair standing pressure in the market, again, your prices drops you'll have to, you know, offer more tokens, right? So this was quite a relative rule. But you mentioned that we'll have to, you know sell out more coverage get more premium and build up the investment portal that volumize more returns. All this combined together, we can offer a pretty, you know, APYs to the users. Yeah.
Bobby Ong [00:19:00]:
Yeah. So, it's kind of good way to segway into the investment portal, right? So you mentioned that there will be an investment portal. Maybe tell us a little bit more on what is this investment portal? When will it be launched? Why is this important in the InsurAce product offering?
Oliver Xie [00:19:14]:
Yeah, sure. So not just for DeFi insurance protocols, so even in the traditional insurance industry, many of the big insurance companies are actually heavily the relying on their investment type abilities. Like Warren Buffet is a, is a good example. So for us I think the mechanism is similar that there will be some free capital, which is reserved for your claim payout, but at the current time, you may not really need it, but for this part of you know capital, we call it the free capital. So we can use a portion of this free capital for investments, whereby we can invest I think like currently investment are mainly into DeFi space. So with this investment return, it will come back to supplement the staking pools. Another product design where we're going to have is an integration with other Yield Protocols. Let's say, there are a lot of yield protocols in the market, but instead of users to invest into the yield protocols at the same time they buy an insurance. So why not just you know, stake or buy the investment products from our portal, at the same time, we add a build-in layer of insurance so that what you invest in is kind of protected already. So I think that's something that we're going to provide as well. Yeah. So these are things about the investment portal.
Bobby Ong [00:20:29]:
So that's interesting, right? So instead of me kind of going to Yearn Finance, YFI and putting in my USDC or my YFI or whatever you want to gather, and then having to go to Nexus Mutual or InsurAce to buy insurance on top, I mean, if I want to have some protection, you're saying that you can kind of stake your stable coins on InsuraAce investment portal, earn a yield on it from YFI and then have the Yield protected with insurance as well at the same.
Oliver Xie [00:20:59]:
Yeah. Yeah. Yeah. So that's something we are going to build for the investment portal as well. So you mentioned that we wanted to build the investment portal into a secured as a yield entry for the DeFi space. At the same time, once we have that APY in place, even other protocols like Dapper or like Instadapp, they can actually come back to integrate with us, integrate their insurance service into their, you know, dApp as well. Yeah.
Bobby Ong [00:21:25]:
I'm curious to hear of your thoughts, right, I mean, a lot of these DeFi protocols launched and they, I mean, a lot of these new ones could be bit risky and they, when people put their funds in this protocol, there's always no insurance by default. Do you see a future where, or do you see yourself doing partnerships integrations with DeFi protocols, where from the get go, from the beginning, every user who participate in this new DeFi protocol is already insured a hundred percent, InsurAce without having to purchase extra insurance?
Oliver Xie [00:21:56]:
Yeah. I think that's something I suggest, you know, introduced, that's something we wanted to build and secured. So that every time you come in, you can, of course you can, there are other entries you can come in to DeFi, but it's not insured. It's not secured but you can come where our portal. At the same time, you can get an insurance service built in. So it's just like sometimes when you're taking a flight, right. So you can either choose to take a flight insurance or you do not. But most of the time, I think everybody would just by default, they would just choose to buy the flight insurance. So in this way, I think it's similar. Every time they come into DeFi, there might be an option. Hey, would you want to get insured? If you tick that box, then again along the road, you'll get insured. And the key thing is that we need to make this affordable. So if let's say, if people feel that well, this is so expensive. I mean, let's say if I get 10% of APY, then I have to spend like 5% for insurance, I think people will not be willing to take it, but let's say if I got 10% or 15% of APY, at the same time, the insurance cost is like 1% or less than 2%, and people are saying, Hey, I think that's doable because my APY 10% minus the 2% of insurance costs, you got eight APY but it's secured. I think people will be very happy to take that. At the same time for us as an insurance protocol, we set up more coverage, where we provide, you know, real values to the users. That would be, you know, a mutual beneficial way to build. Yeah.
Bobby Ong [00:23:23]:
I like how you described, you compared the insurance in the airline purchasing, the flight purchasing process rights that you have you just tick like, "Do you want to purchase insurance? Yes or no." I mean, from the airline's point of view, that's, I mean, especially for low cost airline, that's a massive revenue generator for them. Some users who wants cheap, you just remove it. It's up to the user to select, but it makes it really simple. Like, it's this the "yes, no, do you want insurance" and it all bundle in together. So, yeah, I can kind of foresee how this will be part of like DeFi in the future. So if you have a partnership with Aave or Compound and then you just take and then you like take, okay, you get an insurance on top of your deposit and they just deduct like 1% of it from. any yield that I get. So, yeah, that's an interesting one. Yeah.
Oliver Xie [00:24:03]:
Yeah, yeah. Yeah. I think that's why personally I always say that insurance is actually at the infrastructure level of DeFi. It's at the bottom of the whole logo. So you mentioned asking everyone who comes to DeFi will need an insurance, whether they like it or not, but that will definitely subject to the users, their choice to use it or not, but there is still that demand there. Yep.
Bobby Ong [00:24:26]:
One of the things that I was reading up is you guys at InsurAce are planning to have a multi-chain insurance service, so you have your Mainnet on Ethereum, but you guys are also planning on BSC, Solana, Fantom, Eco, Polygon. Tell us a little bit more about this multi-chain and how will you sort of work, for example, if you buy insurance on Sushi and SushiSwap is deployed on to a few different chains these days. So do you get insurance on the Ethereum, Polygon, Fantom chain or is it just on one chain?
Oliver Xie [00:24:57]:
Okay. Yeah, sure. So basically I think the multi-chain is one of our strategic direction we are developing right now, so we are developing this in two phases. For phase one, it's more relying on our current Ethereum deployment, but they're providing coverage to other chains. This is what we already, you know, went live in May. So let's say currently we're on Ethereum, but let's say if you want to buy coverage for your protocols on BSC, on Polygon or Fantom or other chains, so you can buy it from on Ethereum. I think that's a stage one. For stage two what we are going to is offer the real you know, cross-chain deployment. And our BSC deployment is in this week. So we're going to announced our BSC version this week. So after that, any chain as long as we have a deployment, you can always buy the insurance for your protocols on other chains. So that will be the next step. So after this week after we announced the BSC, I think the users on BSC can buy insurance for other chains as well. Yeah. So let's go back to your question about Sushi, right? We definitely think about the let's say you buy an insurance for Sushi and it covers all the deployments, no matter which chain Sushi is going to be. But eventually it will make a separate. Let's say you want to buy Sushi for Sushi-Polygon and Sushi-Ethereum, you'll have to buy separate. But of course you can always buy it in a portfolio. The reason here is that we think that the security status, the tech stack, different chains are kind of like different messy. The tech stack and Solana is very different from the Ethereum. Yeah, the EVM-based attack. So that will, you know, resolve into different security status. So eventually we think that we need to separate their interest based on different chains. Okay. Yeah. Yeah. So that's why we offer, I think that that's also a good integration with our portfolio-based coverage. So you can always buy SushiSwap on different chains but buy the mere coverage, if you want to cover our risk.
Bobby Ong [00:26:50]:
And so but at this point in time, if I have to buy SushiSwap on InsurAce it covers all the deployments or?
Oliver Xie [00:26:57]:
No. You have to buy it separately. Yeah.
Bobby Ong [00:27:01]:
And I'm just curious, right. Talking about the portfolio deployment, right, so let's say I purchase a deployment for SushiSwap and or for Ethereum and for Polygon. Let's just say, like, I purchase this for one year and let's just say three months later, SushiSwap launch a deployment on Solana, is there a way that I can sort of edit my portfolio? Maybe I would like to remove Polygon and swap it with Solana for my insurance and kind of keep the, or maybe kind of keep roughly the same premium that I've already paid.
Oliver Xie [00:27:31]:
Currently we do not have this function. Yeah, honestly. But we do have received such feedback from our community. Let's say some people have bought a coverage for two months. Then after two months, they want to extend their insurance or they want to actually swap, let say, firstly they are buying for YFI, then afterward they want to swap their YFI to Curve. So this rarely happens, but currently we have not developed this function, which we call it the Cover Amendment. So you can extend, you can cancel it, you can add in new covers or you can swap it to other protocols. So I think this is something that we're going to develop subsequently, but at this point of time, we haven't provided this yet. Yep.
Bobby Ong [00:28:10]:
That will be quite a game changer, I would say, because then, from a user's point of view, I don't have to end up, I mean, paying for extra insurance that I'm not utilizing. Right. So I could be farming on Compound. And then I just have insurance on Compound, then I switch it to Aave or YFI later on when the need arises, just have to pay the gas costs, right? Yeah. It's interesting. One of the other things that you recently done as well was, you've kind of launched an Initial Dex Offering cover with DoraFactory. Tell us a little bit more about this IDO cover offering with DoraFactory.
Oliver Xie [00:28:43]:
Yeah. So maybe you can remember that back to March there was a security hacking, one of the ideal platforms, which maybe it's not good to mention a name, but there is definitely such kind of incident. So the IDO Event Risk we offer is similar so we are trying to, you know, secure the whole IDO Event, no matter if that's for four hours, eight hours or forty-eight hours. So the IDO Event Risk is to cover in the security risk during the whole IDO Event. Let's say the IDO platform got hacked or there is some, you know, smart contract rate, whatever it is, in the IDO platform and, and cause that asset lost to the project teams. So where the IDO Event, uh, you know, our insurance is to cover this type of risk. So this is one of the functions. Second function is for some of the new protocols. I think most of the projects to do IDO are new projects. So, if we come in as an insurance provider, then this will kind of help them to enhance their user confidence and help them to grow their business. So there are basically two functions. One is to cover the security risk, and another one is to kind of endorse the project. So in this way we are actually helping the small or new projects to grow. Yeah. This is about the IDO Event Risk, the insurance. Yeah.
Bobby Ong [00:30:01]:
You guys are pretty new. So there hasn't been a claim event on InsurAce yet. And I think, I guess for any insurance provider that's something that the community always look forward to to see if the insurance actually works or doesn't work, like whether it pays out or doesn't pay out. The insurance has to be purchased. So I'm just curious, right? Let's just say, there's a hack that happened on one of the protocols that you cover. And I've sort of purchased insurance on InsurAce, say, what will be the claim process like on InsurAce and how do I go around submitting my claim for the insurance that I've purchased?
Oliver Xie [00:30:32]:
Yeah. Sure. So after you purchase the cover, right? So if during the cover active period, so if there is any hacking event happens, you can always submit a claim request from our DF portal or even during 30 days after the coverage is expired, you can still submit a claim request. After the platform receives the claim requests, then there will be an advisor board. The advisor board, it will be consisting of people from technology, insurance, or legal compliance. They have this type of expertise. They will investigate into the claim request to verify whether this really exists, this really happens, there is really this amount of loss or not. Cause they will come in to investigate and verify the claim request. After that, they will have a reference proposal for the community. Then community will come in to vote based on their reference proposal. So again, here, the advisor board is not making decisions directly. Instead they're just investigating and provide a reference proposal. So because we think this is very necessary, because of the complexity and sophistication of the hacking event. So most of the time, if you just let community solely decide on this, there are might be easily lead to some misjudgments. But again, we need to have some investigation first, then come in to vote on this. So this is a pretty much how the claim works. Advisor board plus the community voting.
Bobby Ong [00:31:58]:
Do you need to suffer 100% loss to be able to redeem, to submit a claim, or even if it's a 10% loss and you can submit a claim. I know there was an incident a few months ago, where YFI was hacked and then they reimburse all the users who got hacked. So everybody was made whole, but some users purchase insurance and the insurance payout as well. So what will happen on InsurAce if such a situation were to happen again?
Oliver Xie [00:32:24]:
Yeah. Understood. Because I think personally, some people bought insurance on Nexus Mutual, so Nexus Mutual actually has a criteria that you must suffer from a substantial loss, which is 10% of your insured amount. But let's say that actually leads to an issue. Let's say I just suffer from 10% of my loss. So then I just got claimed. So for us, we under our thinking we do not have set this kind of limitations. So instead once you got any amount of loss you can always submit a claim request to us. Of course, I think this will increase the operation burden for interest. But again, I think it's actually good for the users. Yeah.
Bobby Ong [00:33:03]:
What happen if the user, there was a hack on Yearn, but the user did not suffer a loss, so the funds will drain, but the team sort of made whole on loss. So from the user's point of view, there is no loss, but there was a hack incident, right? So would you pay out like for the YFI case?
Oliver Xie [00:33:19]:
For us and we'll still pay out.
Bobby Ong [00:33:20]:
Will still pay out?
Oliver Xie [00:33:21]:
Yeah. Yeah, because um, first is that the user really suffer from this loss from hacking event. It applies to our insurance scope. So at the same time, I think the compensation they got from YFI is their portion to pay, but for us, if we have this responsibility, obligation, you know, to pay to the users who bought our insurance. So I think it's not really correlated. Yeah.
Bobby Ong [00:33:44]:
Yeah. And recently, there were a lot of hacks happening on the BSC and it's interesting that you guys are looking to get onto the BSC space. I don't know if that's a good thing or a bad thing because there's a lot of hacks on BSC, but you also make BSC safer. A lot of projects were kind of anonymous in the BSC. I guess, there's a few questions here I supposed right, so how do you evaluate what projects or what protocols to be added to your list, especially in BSC, where so many anonymous or so many rug pulls happened and I guess to prevent this right, I mean, some projects can sort of get audits, buy insurance post up bug bounties, what do you think is like the most effective way for projects to kind of stay safe I supposed?
Oliver Xie [00:34:23]:
Yeah, sure. I think although BSC recently have a lot of, uh, security incidents and many of the projects that are anonymous, but eventually we have a risk assessment process. So the project teams will need to answer like 40 plus questions to provide various kind of information to us. And then after that, we'll run a very rigorous risk assessment based on those information collected. So after that, we will decide. Although, currently this is kind of a little bit of a centralized decision-making because we haven't run too much on the de-centralized voting process yet. But we will make a decision on whether to list this protocol or not. The same time if were going to list, that what's a basic premium level we're going to have. Because I think for insurance is always about pricing of risk, trading of risk, right. For some of the protocols, let's say they're highly risky, then you could always, impose higher premium level on those protocols. Yeah. So I think one of the, that's one side of this thing. Another side is that I think for BSC they still have a very good ecosystem. A lot of projects there, a lot of users there, and especially the huge traffic that Binance can bring in. That's actually good for project teams to grow BSC. So eventually we still, you know, made the decision to develop to BSC. And it's launching this week. So we hopefully I think after we announced the BSC, we'll get more users, more coverage there as well.
I think it's just that there are so many hacking events on BSC. That's why we should come in to make a play. We should come in to protect the users. Yeah. If everybody, everywhere it's safe everywhere. So there is no many of us to exist, right? Yeah. Yeah. And I think back to the question you ask about like for the project team, they can do audits, you know, they can do bug bounties and also they can buy insurance. So I think there is a saying goes like you will always need to work for the best but prepare for the worst. So I think matters like you do bug bounties, you do audits, these are the things you need to work for the best, but insurance is what you should do to prepare for the worst. Let's say the worst case happens, your protocol got hacked, users will not be responsible. Currently all the auditors, I haven't seen anyone take on obligation towards their auditing or the bug bounties, they do not take effect when there's a hacking event. Only insurance will come in to compensate your loss, to safe your day. So I think that's something the project teams need to consider, you know, always work for the best, but prepare for the worst. Yeah.
Bobby Ong [00:36:55]:
Yeah. Yeah. I think that's a very good advice, I would say. Yeah, I think we're kind of running up to the end of the podcast. I think one last question that I have for you is basically any interesting upcoming plans for InsurAce this year? I mean, you've sort of mentioned some of them already throughout the podcast, but maybe you can kind of sum it up or any other things that you haven't mentioned yet would be interesting to hear from you.
Oliver Xie [00:37:15]:
Yeah. So basically for InsurAce, we'll continue to, you know, just ship up our product. So there are a few directions. One is a multi-chain, which we're currently developing. So we're going to launch to BSC this week. And actually Heco is coming very soon. We have built an in-house bridge for people to transfer insured tokens among different chains, very conveniently. And also we have participate in one of the chains for [inaudible] a next step. So I think for multi-chain, where that will be the next chain for crypto space. And the second one is a B2B insurance. So apart from the insurance services we offered to the users, to DeFi users, I think we're also trying to expand our B2B business so that we can offer insurance, work more closely with the project teams themselves. Because, this is why we call it the B2B is that, I think the insurance demand from project team side is more diverse. They could have different demand for the insurance, how it works, what's the cost that want. So that's why we wanted to make some more customized tailored service for the project teams.
So let's say for some of the new project teams, if they can get some insurance, this will definitely boost their users' confidence. Whereas for some of the mature big protocols, they will always have this kind of insurance probably they want to have a larger capacity because they have a much, much larger TVL have to cover. So there are definitely different insurance demand from different project teams. So we're developing a step of B2B insurance to serve. And also the investment protocol as I mentioned, and I think the last one is a business growth. So eventually we did all these projects developments, we did others marketing, community building. eventually that we need to convert all this into our business growth. There are more to cover or more premiums, more investment returns. I think this is a way, eventually we can create values to our community, to our users and our token holders.
Bobby Ong [00:39:14]:
Yeah. I think you brought up some interesting points on some of the plans and I thought it was, the B2B approach was kind of quite refreshing for me, quite an interesting deal. I mean, if you think about it, like we've seen a rise of DAOs, a lot of teams have, I don't know, hundreds of millions of dollars in tokens and in the DAOs, and these DAOs could be sitting on one smart contract, which can be good or scary at the same time. If there's no insurance on it, someone could want to insurance on this smart contract and some of them are, you know, not just that, they are actually diversifying that DAO and they're putting them into new aggregators and all to kind of get some revenue for the DAO. So I see how it can be a pretty big growth opportunity for you guys to focus on B2B. So that's definitely quite an interesting approach and yeah, very happy to hear that.
Yeah, I think, I think we've reached the end of the podcast. It's been an interesting past 40 minutes or so talking to you. Definitely learned a lot of things about InsurAce and thank you very much for taking the time and to explain things to us here on the CoinGecko podcast.
Oliver Xie [00:40:12]:
Thank you Bobby. And thank you for offering this opportunity talk to your audience explaining about what InsurAce is, how InsurAce works, everything interesting about the crypto space. Yeah. Thanks again. Yep. Thanks for the opportunity.
Bobby Ong [00:40:26]:
All right. That wraps up the show. Thank you for listening to the CoinGecko podcast with Bobby. If you like our show and want to know more, check out podcast. coingecko.com. Or please leave us a review on iTunes. If you have any feedback, do drop us an email at email@example.com. Join us for more next week. See ya.
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