On March 20 Etherisc held a community ask-me-anything (AMA) session in the Etherisc Telegram channel. The three Co-founders, Stephan Karpischek, Renat Khasanshyn and Christoph Mussenbrock, were answering questions from the members of the group which ranged from the current going-ons, new products in the pipeline and marketing to the scaling of the Ethereum network. We picked out the most interesting topics and hope you’ll enjoy the read. You can find the link to the whole AMA at the end of the blog.

Etherisc team is ready for AMA

Q1 — Can you share what the Etherisc team’s been up to these days? How is the Token Generation Event (TGE) preparation coming along?

STEPHAN: We are currently meeting in Munich. We have set aside a few days to meet in person, discuss the current status, and plan for the next steps. We are mostly focused on processing Early Contribution Agreements and getting KYC alternative integrated into our registration process.

I was also travelling last week and speaking at two events. One was the Global Insurtech Roadshow in Frankfurt, the other was Start Summit in St. Gallen.

RENAT: Personally, I’m focusing on enabling new products built by the ecosystem. Since December, we’ve received a record level of 14 new product requests. These requests are mostly from 3rd party developers who are interested in new products. Some are asking us to build new products, others are interested in building their own insurance products using the Etherisc protocol or platform infrastructure (product templates, license-as-a-service).

Four new products, both, from Etherisc and 3rd parties, are aimed at low-income individuals or populations that do not have access to insurance products (because insurers don’t have enough incentives to offer such products).

We are also reviewing our pipeline of proposed and requested products, and matching them with individuals who can help us build products (Keepers who can organize product teams, full stack developers, designers, data scientists, actuaries, marketers/distributors).

If anyone is interested in suggesting a new insurance product and become a Keeper, or joining an existing team (full stack developers, designers, data scientists, actuaries, marketers/distributors) — I would love to meet you, please reach out to me via DM or send an email to [email protected].

CHRISTOPH: Regarding TGE internal preparation, we are focusing on several topics. One is secure funds management. This includes which wallets we will use, and how can we mitigate possible attack vectors. The other one is the implementation of Terms & Conditions to the TGE smart contract, especially Bonus processing, together with the final audit of TGE smart contract. There’s also building the TGE handling infrastructure, and of course, tackling the remaining legal issues.

Q2 — Three questions: Is Etherisc following the efforts and progress of the B3i, are you working with or talking to the consortium members, and what competitive edge can/will Etherisc have to a consortium like this (B3i)?

STEPHAN: Of course. We have met and been talking to some of the B3i members: Swiss Re, Allianz, Munich Re, Generali, Zurich, Tokyo Marine, Hannover Re. Concerning the third question: B3i is mainly focused on applying blockchain technology to improve the existing industry processes. Our mission is to enable decentralized insurance.

Q3 — How will insurance fraud be addressed in a decentralized way? With flight-delays this is quite clear but when we move to crops and weather based data it becomes a bit harder I presume.

STEPHAN: Fraud is an issue and hard to address in a fully decentralized way. Most important is to balance the incentives so that fraud is not attractive from an economic perspective.

RENAT: We are realistic that it is not feasible to eliminate 100% of fraud. In worst case scenario, the system will work just as it currently works in legacy insurance — cost of fraud is baked into the premium.

We can implement multiple oracles (sources of truth) as well — 2 of 3 set up. Imagine 4 providers of data for crop damage: a) self-reporting with photos b) satellite, c) airline/drone API service provider d) weather station. The builder of a product only found three data providers, and selects “2 of 3” payout trigger. Similar to multi-signature wallet. If 2 out of 3 providers agree, then the claim is paid automatically.

It’s noteworthy that protocol-native incentives aren’t available in products built by traditional insurance companies. Compared to traditional legacy insurance products on the market today, Etherisc protocol provides incentives to reduce fraud. That is, anyone can join any product as a specialized Fraud Prevention Oracle, — responsible for fraud prediction/detection/spotting service.

There are also mechanism of incentives to reduce fraud. Fraud Prevention Oracles can price such service as a) % of savings (subset % of premium income) b) per API call c) % of underwriting profits. The outcome are cheaper products with less fraud. So long as incentives to reduce fraud go directly to the domain experts, the products built on Etherisc will be cheaper and have less fraud compared to centralized systems. Why is that? In centralized insurance products fraud prevention specialists only earn a salary or sell their fraud prediction service as software license or API. Now compare it to the ability to earn of fair share of value (% of savings, or share of underwriting profits) earned by the same service provider using Etherisc protocol.

Q4 — Are there any plans/ideas on how to address privacy concerns, regulations?

STEPHAN: That’s a broad question 😊 Regarding regulations: I think our regulatory strategy is really paying off now. In a highly regulated space like insurance, we need (for example) to be very strict on the KYC / AML side. We spent some time talking to regulators, and also educating them, and now we have much more regulatory safety for the DIP token model and the TGE than ever before. That’s very good IMO.

And we are very careful not to store any sensitive or personal data on a blockchain, and of course we comply with Swiss and German data protection standards.

Q5 — How confident are you in Ethereum to scale and do you have a back-up plan if it doesn’t?

CHRISTOPH: I have great confidence in Ethereum’s potential to scale. Plasma, Polkadot, Raiden,… are all great projects addressing some aspects of scalability. There are more options — proof of stake, sharding… of course these are things to come, but I have no doubt that scalability will eventually be solved, and that Ethereum will be a pacemaker in the development. But we will see times of congestion; don’t forget that we still don’t have “big” applications.

STEPHAN: I would add that there are more blockchain platforms out there which are (or will be) Ethereum Virtual Machine-compatible. At the moment I see Ethereum as the currently dominant platform, with the strongest developer support.

Q6 — What about marketing for the TGE? What are your plans? Are you going to promote it or let it be organic? What about bounty programs? Almost every crypto project has these crazy airdrops, bounty programs, 10–20K users in their Telegram etc. In that sense, Etherisc is different. What’s your take on that?

RENAT: We are not promoting TGE. We are focusing on enabling product developers. Therefore our marketing budget is focused on promotion of a) the protocol and b) building/designing products. We will probably invest more in marketing of protocol/products and targeting end-users, not speculators.

STEPHAN: We are now focusing on processing the Early Contributors. As soon as we have a good overview of how much we can potentially raise from them, we can adjust marketing efforts as needed.

I am a big fan of bug bounties and to improve the quality of software. We are considering developing a bounty program for product development. I think that most people asking for bounties here are thinking about bounties for ICO promotion, which are likely to attract highly speculative investors, and IMO these purely promotional bounty programs are difficult and a lot of effort to manage. We have seen projects, which put a lot of effort into bounty programs and with rather questionable results.

I think in general, we have to differentiate bounties. Bounty for what? For example I think that bounties for translating the whitepaper would make sense.

Q7 — So, for those who are reading this conversation and are new here, what is the use of the tokens in the ecosystem? Can you explain it in brief?

CHRISTOPH: The decentralized insurance platform will offer plenty opportunities to earn money — in different roles and functions. Everybody who participates will have to hold some DIP Tokens — and transactions will be generally in DIP Tokens. We incentivize holding Tokens and transacting with Tokens — this will generate token value.

Q8 — What will happen to DIP token (pay function) if/when a stablecoin or other fiat/crypto asset is used instead to pay for products and services?

STEPHAN: The DIP token can and will still work as a platform token to align incentives for all participants, e.g. by staking DIP to provide or consume platform services.

CHRISTOPH: DIP Tokens will be a necessary part for any interaction which uses the “valuable” parts of the platform, e.g. regulatory framework, risk capital…

Q9 — Will you need to convert most of the ETH received during TGE to fiat to fulfil capital requirements of future licensed commercial entities?

CHRISTOPH: No. We will need *some* of the funds but not the major portion.

STEPHAN: Very good question. I personally would prefer to hold most of the funds in ETH and convert a reasonable amount for development runway. We are also considering other sources to raise the capital needed to meet regulatory requirements. We have received a lot of interest from institutional investors who can’t invest in tokens. They would be interested to invest in an equity round.

RENAT: In addition to replies by Stephan and Christoph, I could add that we have a couple of offers of capital (separate, from VC and insurance industry participants who can’t participate in the TGE) to fund capital requirements of licensed commercial entities providing instant “license-as-a-service” to users of Etherisc protocol.

Q10 — Is the Etherisc team looking to hire more people in their team? Where can one find available openings and how can one apply?

RENAT: Yes, I’m looking for engineers who are interested in getting paid to research new products for token economies, for example, insurance for payment channels.

To see the whole AMA, or if you have any additional questions, feel free to join the Etherisc Telegram channel, and ask away. Also, check out the whitepaper on our website.