The Founder Fireside Chat series hosted by DeFi Pulse interviews DeFi founders in the hopes of offering readers an opportunity to better understand their perspective and what drives them to build their vision.
We’re joined by Alvaro Fernandez who is a core team member at Nsure Network, a distributed insurance marketplace based on Lloyd’s of London’s insurance model. Different from mutuals, Nsure is a market place to trade insurance risks, where premiums are determined by a dynamic pricing model.
What are you building and what sets it apart from similar offerings in the space?
Overall, we’re building an alternative solution for DeFi-native users to not only obtain coverage for main risks associated with decentralised protocols and platforms, by bringing in a more sophisticated and fair model towards all kinds of participants within our platform.
When compared to overall insurance approaches, we can say that Nsure is designed to solve the principal agent problem and allow anyone to become an insurance issuer for the DeFi sector. While conventional insurance depends on issuer’ judgment on claims, Nsure rids these unequal judgments by adopting on-chain resolution via claim assessors.
In regards to the DeFi space, most solutions are based on the model of a mutual, where any participant shares the risks of the platform. By more sophistication, I address to the levels of engagement and targeted exposure users can choose to have.
Let’s dive into some of the core features that enable this: Nsure’s “DeFi insurance” is based on 1) supply demand driven Dynamic Pricing Model, to find the right price; 2) the Capital Model, to secure capital required to back the risks at any point in time; and 3) 2-phase crowd voting mechanism, to make sure every claim is handled in a permission-less and transparent manner.
Nsure Network is a permission-less platform for whoever wants to purchase coverage, underwrite risks, or provide collateral capacity as capital providers. Underwriters can utilize NSURE to stake on specific insurance risks of their choice to receive a share of daily insurance premiums; while capital providers deploy capital into the capital pool to be utilised as part of the collateral capacity to support policy purchases in exchange for mining NSURE (what we call Capital Mining). As you see it quite differentiates itself as a model from any alternative insurance protocol in this space.
Which quality of the Scalability Trilemma do you find to be the most important?
To address the Scalability Trilemma, I would part from the thought that none of the three qualities should be undermined. While we have built a decentralised platform, scalability has been one of our core concepts to bear in mind while designing the model.
At the stage of building (and today), active policy value covering assets deployed in decentralised systems & it’s capacity is merely a fraction (approx USD 500mil; as of July 24th 2021) of the Total Value Locked (TVL approx USD 60 Bil.) at the time of writing. Less than 1% penetration rate. Current established platforms alike Nexus Mutual have flat premium rates, often running out of capacity when demanded; which we aim to improve with our Dynamic Pricing Model.
Regardless of scalability, and given the ethos of insurance, I would consider for our platform the most important quality to be security. Security at various levels: 1. At protocol level, where or concerns towards robust code and avoiding vectors of exploitability are at our core, while the more general concept of providing the means and tools to overall users to benefit from ways to secure their engagement in DApps.
What is the most critical part of forming a lasting community?
One of the most critical parts we can identify of forming a lasting community is the matter of not only having a transparent & continuous channel of communication between the team and community, but also empowering the community itself on participation within any kind of protocol rules, updates and adjustment measures to be taken along the way.
Having such values central to community building, we believe supports one of the core requirements for a true decentralised application to emerge. Governance being one of the main components that empowers this and translates into a lasting community, as it is not the team, but the community of users that strive for improving and iterating on the platform they are part of. This is one key concept we are recently in works to take drastic changes in direction, after a steep learning curve gone through in the past. Last but not least, the latter is not a plug-and-play, but rather an ongoing process we have now identified to be one of the main potential focuses for us to improve and grow. Hence why we are having this fireside chat today!
What is something in DeFi that you think more people should be paying attention to?
That’s a tough one. Many things could be enumerated here, from deep-dives into sustainable generation of yields within and across protocols (one of the big interests at a personal level), to finding the roots towards what we are aiming to achieve with open finance infrastructure (what we know as DeFi, yes), taking a step back from many gamified protocols and question it’s true value proposition.
But regardless of these, if I had to relate to the purpose of the platform we have built and are in continuous process of iterating, one of the core things people should pay more attention to is the different attack vectors of this new systems that are being built, and it’s inherent risks (clearly differentiable from what we know as CeFi). Identifying such risks, allowing for means to cover and/or outsource these is what we believe will be one of the core drivers of adoption for different user profiles along the way; wether individual or institutional.
What is a critical lesson you have learned on your journey?
Since we started our journey on building Nsure about a year ago, the space has matured considerably and taking multiple twists in direction. But one constant that has proven success across different sector verticals is the importance of community, mentioned above.
It’s been a great learning process to have identified parameters of success as a platform, product and community, and being able to take alternative moves in the direction is key on this journey throughout Blockchain and decentralised applications. Continuous learning and growth, and moreover putting this into place by iterating and execution is one of the values and qualities one can always pick up and benefit from.
What is your favorite meme from the DeFi community?
Haha, there’s plenty of good TradFi memes I’ve come across, but if I were to pick one, it’d be the classic McDonalds cap meme. a classic throughout time.
Thank you for reading! And thanks to Alvaro for joining us this week.