What is Etherisc?
Etherisc are building an open-source platform for decentralised insurance. This includes a technical protocol and application layers that will enable service providers from insurance companies, insurtech startups and financiers of the back-end reinsurance. The platform enables a wide range of insurance applications from commercial insurance to mutuals and P2P insurance making Etherisc the current largest provider of insurance products on the blockchain.
In 2016, Etherisc created and alpha-tested a flight-delay parametric insurance application called the Flight Delay App providing flight delay policies to attendees of Ethereum’s Devcon2 conference. They have continued to build upon this application and are looking to redeploy the product on their Generic Insurance Framework on xDai.
Building upon parametric insurance provides Etherisc a strong foundation for the platform as the payout decisions for products where it applies is completely derived from data sources and algorithms. This means that when certain conditions are met, a self-executing piece of code will come into effect.
Note that Etherisc envision scenarios where data sources and algorithms alone could not create a decision itself and in these instances, they state that independent claims agents will be able to use the platform. However, they do not state how such an agent could be used
Etherisc is built utilising a two-fold approach consisting of an independent, not-for-profit foundation and a holding company comprising a number of subsidiaries in a number of jurisdictions. This would appear to create a level of centralisation but Etherisc dispels these fears with the following:
- The not-for-profit foundation is decentralised and the purpose of which is to develop the open platform and keep it open permanently. The foundation is bound by its articles and they cannot be changed easily; and
- The commercial entities are bound to the purpose by having a percentage shareholding by the foundation who are able to block any changes to the purpose if the owners of the subsidiary attempted to make a change.
Although this structure seems a bit convoluted, it serves a purpose. It provides central services for all participants. For these services, the entity will have an “obligation to contract”. This will empower the whole platform and encourage smaller participants to join in. Such services could be licensing, marketing, product development and creation of new products, or support with KYC, AML and other compliance issues.
Etherisc received approval from the German Financial Authority in respect of their new legal model.
Who is in Etherisc's team?
Etherisc’s three co-founders are Christoph Mussenbrock, Stephan Karpischek and Renat Khasanshyn.
As well as co-founder, Christoph is also the CEO of Etherisc. He has over twenty years of experience in the German banking sector. After several years on the board of a IntegraBank eG, a German co-operative bank, he spent ten years as Chief Program Manager Credit Solutions and Chief of Strategy Development at Fiducia and GAD IT AG, a national IT service provider. Subsequently, he was CEO of parcIT GmbH, a market leading company specialising in risk management solutions.
Stephan has multiple decades experience in IT businesses and has advised finance and telecom enterprises on digital strategy. He was part of the UBS Crypto 2.0 innovation lab at Level39 applying blockchain to banking use cases. He also founded B9lab, a world leading provider of blockchain education and training.
Renat is a partner at Runa Capital and CEO of Altoros. At Runa Capital, his team looks at infrastructure for smart contracts and the potential of IoT. As CEO of Altoros, he has led the insurance practice with its key customers Allianz, Allstate and Liberty Mutual. The practice is being led focusing on the use cases of blockchain, reinsurance and insurance securitisation.
Etherisc names multiple advisers within their documents. Ron Bernstein was previously the CEO of AugmentPartners Limited, a software development company focused on decentralised trading dApps and blockchain data management. He also was an early advisor to the Augur Project who built a decentralised prediction market on the Ethereum blockchain.
William Mougayar is currently on the Board of Directors of the protocol behind OpenBazaar. He is also a former adviser to the Ethereum Foundation and a member of OMERS Ventures Board of Advisors (the venture capital arm of OMERS, a pension fund with net assets of 109bn CAD).
Jake Brukhman is the co-founder of CoinFund LLC, a blockchain advisory company and a crypto-fund operating since July 2015. He is also the co-author on multiple whitepapers including Etherisc, Kin and Sweetbridge among others. He was previously a partner and the CTO at Triton Research.
What is DIP required for?
The Decentralised Insurance Protocol token (“DIP”) has a number of fundamental uses on the Etherisc platform, these are:
- Customers can buy insurance using the token. As with most insurance platforms built or being developed on the blockchain, third parties can offer payment gateways and integrations which remove the necessity to own cryptocurrency from the end customer;
- Decentralised distribution will be integrated onto the platform allowing insurance providers to utilise sales agents. The token will therefore be able to be used as a means of distributing revenues or profits to the sales agent;
- Customers could get paid for voluntarily offering their data to a data pool which can be sold to interested parties. The ownership of the data is completely with the customer and could be revoked at any time;
- It can be used to pay oracles and prediction markets to resolve claims; and
- Can be staked as collateral.
Who has Etherisc worked with to develop the platform?
Etherisc has begun to create a niche in the market with their parametric crop insurance programmes. They have explored the following avenues to expand their reach with this product including:
- Aon & Oxfam: Etherisc has developed an inclusive and affordable crop insurance using ongoing weather index insurance programmes to support farmers in Sri Lanka; and
- Acre Africa: Continued development of the innovative parametric crop insurance has allowed Etherisc to expand their offering to farmers in Kenya.
It is soon to release it's updated Flight Delay Product which will be a very telling event to see how they can attract customers as opposed to the above where they have gone to the customers. The Etherisc platform was developed in conjunction with:
- Chainlink: Etherisc is leveraging Chainlink’s decentralised oracle networks to enable multiple different products including the unique Flight Delay Product;
- Vivat: Subsequent to being accepted into the Financial Conduct Authority's regulatory sandbox to provide executive level support to formalise the FCA application and testing process; and
- Generali Suisse & Shift Crypto: Etherisc is working with Generali Suisse & Shift Crypto to continue the development of their offerings and create an innovative retail value proposition.
Etherisc have also announced partnerships with both Lakesside Partners (a key player in developing the Cryptovalley ecosystem in Switzerland) and Inacta AG (a major service provider for the Swiss insurance industry).
Where can you buy DIP?
The substantial amount of the Decentralised Insurance Protocol token (“DIP”) in circulation is sold on Uniswap (DIP/WETH). It is currently priced at ?0.2297 per token with a market cap of ?40,358,620. Note that the current circulating supply is at a meagre 18% which places a significant amount of downward pressure on the value of DIP when the they are unlocked.
What does Etherisc have in plan for the future?
Etherisc has a number of goals that they are trying to achieve during 2021. Principally, they are:
- Deploying a new instance of GIF (“Generic Insurance Framework”) on the public xDai chain. They are looking to use the xDai chain as an alternative to Ethereum as a result of exorbitantly high transaction costs which would add a significant percentage of cost to any premium that is small in value;
- Re-deploy the already well known and successfully tested Flight Delay Product (“FDD”) on the xDai chain GIF using xDai as payments;
- Continue the design of crop insurance in Kenya with Chainlink with the goal of providing 250,000 Kenyan farmers with easily accessible and affordable crop insurance. A first prototype will be available in 1Q21;
- Continue their prototyping and designing of multiple insurance products including hurricane protection, social insurance and crypto wallet insurance; and
- Conduct security audits of all major parts of the platform to provide best-in-class security for platform users and developers.
Etherisc is also assessing the manner in which the DIP token will be staked, the main role of which is to stabilise its economic ecosystem.
Conclusions
Etherisc is another very early mover in the insurance space and have offered a contrast to Nexus Mutual by their parametric insurance offerings. Their marquee product could capture substantial market share in Africa and Asia where agriculture is a substantial part of livelihood but are affected by adverse weather such as droughts and floods.
The DIP token has already seen incredible growth with a 643.1% increase from the token's release in September 2020. This is coincidentally very close to the growth that the NXM token also saw since its release. They have a strong team who have been able to create a platform that will result depend substantially on algorithms (which may result in dependencies on Chainlink). The token has significant utility and the ability for insurance providers to fragment the sales process to enable payment to advisers creates a positive that could help attract providers to the platform.
There are a couple concerns that I do have with Etherisc:
- They are currently quite restricted in their offerings, and have shoehorned themselves into a niche. The functionality and success of their new products will go a big way to dispelling this;
- Being built on the Ethereum blockchain would mean they would be impacted by higher gas fees and require efficiencies in Ethereum to make the platform more cost effective; and
- Current circulating supply is only at 18% which poses significant concerns as to where the rest of the tokens are and the ability for the holders to dispose of them.
I do like Etherisc as a product. I like the concept of parametric insurance and their ability to build connections with the likes of Aon to start exposing themselves to the capabilities and potential of their product. The circulating supply is a significant concern to me at the moment and is the one thing that would stop me from saying "this is one to buy". I guess that places it currently as "this is one to watch". If there is sufficient information released in the future suggesting that these coins couldn't just be dumped, this may be something that will be interesting to hold in people's portfolio.
Let me know what you think in the comments! Is it a coin that you'd be keen to hold? Do you think there is potential for Etherisc to compete with non-blockchain providers using parametrics?
Whitepaper: https://etherisc.com/files/etherisc_whitepaper_1.01_en.pdf
