inSure DeFi

A crucial component of an effective insurance platform is the financial transparency, which includes how funds are utilized and if there is an adequate premium float to cover potential claims. With blockchain technology serving as a decentralized ledger, every node holds an identical copy of the data. As soon as there's a change in the data, all insured parties can access the synchronized and updated information, ensuring each fund's operation is open and transparent. Consequently, there will be a dedicated section on the website's homepage to share relevant details, providing quarterly updates on the financial status, including risk factors, minimum capital requirements, historical token prices, a summary of claims evaluations, and the number of tokens locked and traded.

inSure's cryptocurrency insurance is structured around:

I. A Dynamic Pricing Model, which determines the accurate market price through supply and demand;

II. A Capital Model, which secures the necessary capital to back risks at any given time;

III. The inSure DAO voting system, ensuring that each claim is processed in a transparent and permissionless way.

The insurance industry relies heavily on leverage, which makes the capital model crucial. This model is designed to calculate the needed capital to assure that the risk pool remains solvent at a very high confidence level, such as 99.9%, according to the latest EIOPA's Solvency II framework.

The Capital Model is instrumental in determining the minimum capital that must be held by the fund, which includes:

I. The amount of capital locked within the Capital Pool;

II. The staking power applied during the Staking phase.

Each time an insurance premium is paid, the surplus pool accumulates. Specifically, 40% of the premium is allocated to the surplus pool, with an additional 10% set aside until the contract expires. If no claim is made, this portion also joins the surplus pool. Over time, the surplus pool will grow and be used as the primary source for covering insurance claims. Should the surplus pool be insufficient, the capital pool will cover remaining claims. Once the surplus pool reaches a sufficient size, SURE holders will earn a percentage from the staked SURE, incentivizing the growth of the inSure Staked Pool.

inSure holders have the option to stake across various DEXs, earning a percentage from each transaction alongside the insurance benefits provided by inSure plans.

Initially, the focus will be on risks such as scams, devaluations, and stolen funds. As the community votes, less correlated businesses will be introduced, aiming to provide higher returns to token holders.

Normally, all inSure operations are managed by smart contracts. However, to align with users' interests, enhance decentralization, and ensure transparency, some decisions will require community voting. To facilitate decision-making and manage extreme scenarios, the platform will establish an inSure DAO organization. It's important to note that inSure DAO doesn't have control over the fund pool or the ability to release funds to individuals. Committee members can be replaced through voting any time.

inSure DAO operates under two fundamental principles: sustainability, securing community members' interests by maintaining the fund pool's viability, and growth, advocating for sustainable premium increases and DAO membership expansion. The DAO organization comprises experts in insurance, co-governance, and blockchain development. Some powers granted to committee members include:

I. Reaching consensus to implement specific code that cannot be automatically executed;

II. Penalizing bad actors within the inSure ecosystem (e.g., malicious or false claims) by burning SURE tokens;

III. Implementing emergency suspensions under special circumstances.

Beyond leveraging Chainlink's Historical Price Data, inSure DeFi is developing a hybrid on-chain/off-chain application that integrates Chainlink with Google Cloud AI. This allows the processing of blockchain data related to insurable events, such as stolen funds and scams, using Google AutoML, with outcomes then relayed on-chain via Chainlink.

Chainlink's capability to interface with any external API permits GET calls to fetch processing results and feed them directly into smart contracts. inSure DeFi will utilize this distinct feature to harness Google Cloud Platform's ML services, including AutoML and Cloud Inference API, for analyzing publicly accessible information and blockchain data, while using Chainlink oracles to automatically fulfill insurance claims.

After examining various oracle solutions, we chose Chainlink for its proven security and flexibility in calling any off-chain API. As the most extensively used oracle solution in the blockchain space, Chainlink secures over $10 billion in on-chain value across DeFi, working with top projects like Aave and Synthetix. Its network is supported by numerous trustworthy node operators, managed by leading blockchain DevOps teams and aggregated into decentralized oracle networks to offer highly reliable, precise, and tamperproof data feeds. Moreover, the historical price data utilized by inSure is composed of volume-weighted global prices, sourced from both centralized and decentralized exchanges to guarantee high accuracy.

By merging quality data with the ability to connect to off-chain Big Data repositories, inSure can craft more comprehensive and sophisticated insurance products that protect against various crypto portfolio risks.