InsurePal, a distributed social proof insurance ecosystem powered by blockchain technology is now just a few weeks out from commencing its initial coin offering of IPL tokens. Make no mistake, this is a serious project and application. While possessing many use cases from car insurance to the standards of property, casualty, and life, one of the initial and major use cases the team would like to see adopted early is for insurance of blockchain business transactions.
With that feature of the platform forefront, the InsurePal team made a major agreement this past week with Matterum, a purveyor of smart contracts for the real world. The two companies signed a Letter of Intent (LOI) on December 18th to collaborate on the effective mass use of blockchain for the InsurePal application. For InsurePal users in the future, it means the use of decentralized arbitration employing smart contract technology that is to be built into the platform.
How does the Mattereum partnership work with InsurePal?
Mattereum is building the first Internet of Agreements infrastructure project, bringing legally-enforceable smart contracts to the marketplace and enabling the control and transfer of rights in material and intellectual property as well as digital assets, enforced by an international commercial arbitration.
One of Mattereum`s founders is Vinay Gupta, a respected member of the crypto community and a previous release coordinator for Ethereum.
Mattereum and InsurePal share a vision of a future blockchain economy with three pillars:
1. Insurance, 2. Arbitration, and 3. Identity
The companies signed a letter of intent to collaborate in using blockchain to empower individual users of the technology. InsurePal will offer insurance of blockchain business transactions while Mattereum will act as a decentralized court of arbitration for disputed smart contracts.
The collaboration will bring together InsurePal’s social proof model of shared-risk insurance and Mattereum’s dispute resolution infrastructure, both underpinning and boosting the growth of the user-managed crypto-economy. Together, insurance and dispute resolution support claims about identity that can be relied upon because those claims can be insured and compensation in case of misidentification can be legally enforced.
The arbitrage determines who breached the contract and sets the amount of penalties for InsurePal to cover.
The compensation is paid even if Susan’s or Andrew’s identity remains anonymous or is false.
An example of a business transaction insured through the InsurePal ecosystem:
Andrew and Susan want to make a business transaction, but don’t completely trust each other. They sign a smart contract defining breaching penalty, arbitrage body and arrangement’s due date and insure their business transaction with InsurePal.
- Andrew and Susan share the same interests but live on the other side of the world. They want to make a business transaction to exchange goods, but don’t know and trust each other well enough. InsurePal blockchain business transactions module allows them to conclude an upfront agreement in which they specify important terms and conditions of their transaction. They both have to agree upon a maximum penalty for breaching the contract and define an expiry date after which a dispute between the parties is no longer possible.
- In case of dispute, the parties first try to settle it among themselves and if that is not possible, opt for arbitrage.
- Even more, every time a transaction is completed, each of their endorsers` (eg. each note) is rated. Based on their (un)trusted behavior, a Social Proof Trustscore is calculated and presented to other participating endorsers, serving as an important factor of trust for all of one’s upcoming blockchain-made arrangements. By enhancing trust and ensuring the financial compensation for breached contracts InsurePal greatly supports the execution of blind business transactions on blockchain.
- On one hand, the model keeps insurance premiums as low as not to cause any friction. On the other, insurance enhances the execution of all those transactions that would otherwise need to go through the complex process of identity verification in order to establish a sufficient level of trust.
As Matt Peterman, InsurePal CEO describes:
“InsurePal challenges current practices in the insurance industry, which fail to provide a transparent and fair pricing model and needs a new model of risk selection. Our platform connects responsible individuals in a peer-to-peer insurance relationship and avoids covering the costs of irresponsible individuals by introducing social proof endorsements, spreading the onus of financial risk on the introducer as well as the insurer. In addition to the existing insurance markets, we will engage with new markets emerging alongside blockchain.”
“We believe that ensuring financial compensation in a case of a breached business transaction agreement will deal with the lack of trust between stakeholders and greatly accelerate blockchain acceptance. Social proof can bring the premiums down to a level where insurance can be included in any blockchain based smart contract transaction which, in itself, will be a major public benefit.”
The start of the InsurePal token crowdsale is January 16, 2018, and will last until 21 days, it has an $18 million hard cap. InsurePal doesn’t support uncapped token crowdsales as the team is able to provide an estimate on how big an investment they need to achieve the stated business goals. Furthermore, the team believes uncapped token crowdsales turned out to be harmful to the tokenized economy as they are often driven by greed, taking advantage of the hype.
For that, the InsurePal token crowdsale will be processed automatically and a security measure for the contributors will be included. If the minimum goal is not reached, InsurePal will not be able to access the funds, and participating contributors will get a full refund. This measure adequately protects the contributors and eliminates the need for an escrow.
For more technical details on what was discussed in this article and other features of the InsurePal ecosystem, see the InsurePal whitepaper and further links listed below: