Nsure is a decentralized insurance protocol that removes the need for conventional insurance agencies and allows anyone to bear the insurance risks and enjoy the profits.
In the traditional insurance industry, having an active insurance cover doesn’t guarantee you’ll be compensated even when you rightfully deserve it. Some insurance companies try and turn the tables on the insured by claiming, for example, that they have contributed to their misfortunes. Other times, they delay claim payment to try and coarse the insured to take a lesser amount.
Unfortunately, they employ a centralized approach in claim assessment; the insured is almost always at a disadvantage. Fortunately, the entry of decentralized finance (DeFi) in the insurance industry removed the claim assessment from a central authority to a globally distributed team of underwriters. Nsure.Network is among the few reputable insurance firms in the DeFi ecosystem.
The company follows traditionally-proven approaches. For instance, it borrows the dynamic pricing model used by Lloyd’s London. Before we dive deeper into Nsure, let’s get the basics out of the way.
The platform is led by Jeff Ren, Alex Peng, Alvaro Fernandez, Jessie Wang, Gary Lattanzi, Anne Shuai, and Aaron Fang. Notably, the core team members have a deep understanding of the traditional insurance sector, both in hands-on experience and academic qualifications. For instance, Jeff Ren, who guides the system’s management and research, has an M.Sc in Management and previously worked with Chainfunder Capital as researcher and investment director.
On the other hand, Alex Peng has a master’s degree in financial engineering and ten years of experience as an insurance professional in AON. Apart from a close-knit with the conventional insurance arena, the team has substantial experience in the decentralized blockchain space. For example, the head of partnerships and operations, Gary Lattanzi, is a virtual asset analyst and is involved in cryptocurrency data analytics.
Aaron Fang, the protocol’s full-stack developer, has previously developed crypto trading platforms and digital currency wallets. Nsure’s partners include Mechanism Capital, Genblock Capital, Signal Ventures, and 3Commas.
What is Nsure Network?
Nsure is a decentralized insurance protocol that removes the need for conventional insurance agencies and allows anyone to bear the insurance risks and enjoy the profits. The network employs trusted oracles to power smart contracts handling claim settlement.
The protocol has an economic model that incentivizes liquidity providers. Inspired by Lloyd’s dynamic pricing model, the platform relies on supply and demand to evaluate the right price. Apart from the pricing model, the project has a capital model and a voting mechanism at its core.
Nsure’s 3 Primary Layers
Dynamic Pricing Model
In the conventional insurance sectors, historical data helps calculate the risk occurrence profile. The profile then advises the amount the insured party needs to pay as a premium.
Unfortunately, in the DeFi world, there’s not much data to give a rough idea of smart contract risks making it hard to follow the traditional path to determine the insurance payment. This gives way to a dynamic pricing model.
The model uses supply and demand to set the installment. With the model, the higher the capital supply, the lower the regular payment. Also, when the number of policies sold rises, the premium increases.
This forms the next pillar of the Nsure.Network ecosystem. It calculates the capital held in the capital pool and estimates the staking power on the platform.
Nsure’s capital model interacts with ETH, DAI, USDT, and USDC. Note that these crypto-assets are supported by the system when paying a premium. Interestingly, to lower the transaction costs, the protocol employs an off-chain approach to handle any capital model-associated calculations.
The voting mechanism is used in two scenarios; during claim assessment and governance.
In the decentralized world, how does Nsure.Network assess the validity of claims? Through voting. The protocol supports claim submission by any insured party.
However, the filing of a claim requires the platform’s native token (more on this later), Nsure, to be staked.
After submission, all insured parties, also called policyholders, vote on the claim. For a claim to be considered valid at this stage, it must attract a minimum of two-thirds of all participating votes or more than half of all the policyholders’ votes.
This forms the first voting stage in a 3-tiered voting process. In this phase, all Nsure token holders are given a chance to vote before the claim is considered officially submitted.
Also, it involves voting from what the system calls an agency, which assesses the consensus. An agency approves or rejects the decision based on the previous voting round.
The second voting round is done by 5 leading preselected auditing entities decided upon by Nsure token investors. Note that auditing firms receive 5 percent of the insurance premium as an incentive. To reach a consensus, three out of the five companies must be in agreement.
The third phase happens only when there’s no consensus in the previous stage. In such a case, the policyholders can lock their Nsure holdings to raise a challenge. But, if there’s no challenge, the claim is automatically approved and settled.
To initiate the third voting round, there has to be a dispute. The third voting phase is open to all Nsure token holders. A consensus during this phase is reached after two-thirds of the votes fall on either side.
With breaks between rounds, voting on this phase happens until an agreement is reached. Note that tokens staked for voting are locked for seven days.
The Nsure.Network uses NsureDAO (decentralized autonomous organization) to incorporate community governance into the system. Its aim? To factor in its users’ interests, enhance the system’s decentralization, and improve transparency in a sector plagued by dishonesty.
Other functions under the distributed community’s mandate include, but are not limited to, deciding on upgrades to the network and disciplining those who issue false claims and those with ill-guided motives.
The platform has a native currency called Nsure. It has a total supply of 100,000,000 tokens. During distribution, 4 percent of the token was sold to the public, 14 percent allocated to a private sale, while the capital mining and foundation reserve received 55 and 10 percent, respectively.
The team also kept six percent of the total supply, while marketing and operations received 10 percent. Nsure tokens power activities on the platform, including voting on claims and governance-related issues. Furthermore, the token is used for staking.
Staking Nsure Tokens
- The staking process starts by accessing the network’s Underwriter Program Interface.
- When on the interface, hit the “Unlock Wallet” button. Here, you connect MetaMask or any wallet holding your Nsure wealth.
- If you choose MetaMask, click “Unlock Wallet” and provide a password. A connection status will follow this. If the wallet unlocks successfully, the new window will have data such as total tokens available and your staking power. The staking power is four times your connected tokens.
- Also, the new window will list all supported DeFi protocols such as Compound, Aaave, Curve, and SushiSwap.
- Nsure.Network allows you to use only 25 percent of your staking power on a single DeFi platform. Therefore, to increase your rewards, you can stake to all of the four platforms.
- Next, click on “Approve” on your selected platform and confirm the transaction on MetaMask or any of your connected wallets.
- The option to become an underwriter will be activated. Click on the option and select your staking parameters.
- Decide on your level of exposure and confirm the transaction.
- Wait for transaction confirmation from the network.
- That’s it.
Considering the complications in the insurance industry, Nsure.Network is an excellent addition to the DeFi ecosystem. Through capital mining, the protocol can reward token holders by allowing them to stake, trade, or hold their wealth and benefit from price appreciation.
The system’s three-tiered voting mechanism coupled with intense community involvement allows for claims to be settled transparently. Moving from a historical-data based premium assessment to a dynamic process ensures the platform can insure even lesser-known risks.