DeFiDay - Bright Union - DeFi Insurance

foreign [Music] yes hey everybody nice to be here I think you all got a good introduction to decentralized insurance we are bright Union a Dutch an Amsterdam startup we're based in Amsterdam interest and we are decentralized Insurance aggregator bread Union this is kiril he's our co-founder in the tech lead and yes um foreign thanks for introduction yeah so we are bright Union exactly so um a little bit of background how we started so we basically live since early 2021 uh back then we've been into decentralized Insurance World for for a couple of years actually what we noticed in the early 2021 is that the landscape or the concept of decentralized insurance became quite popular right so back then we had their well five minutes ago we had Nexus Nexus Mutual we also noticed their well in shoe races started to appear and then some some others are more as well guys over here so uh and we came to the conclusion that okay so the problem is clear right the problem is the risks in defy uh and so but how to fix that right so risks are insane or big or small we don't know and there were a few few Solutions out there which tried to tackle it in different ways so basically they call themselves actually they don't call them self-insurance because of the I don't think I miss the speak of these guys before but I don't think they call them self-insurers anyway but the point is that they tried to fix the issue of high defy risks and how they try to fix that all totally different someone came up with the idea of cover some came with an idea of embedded insurance but they've been tackling the same the same the same stuff altogether so back then we thought okay so it's it's a complex task but in the solution not not simple either so what if we come up with some common layer for the customers who wants to buy a cover and basically try to compare all the solutions to make it explain what the benefits they have because as I said they all do slightly they have slightly different terminology they cover slightly different risks some of them are saying we cover up pools some of them say we don't some of them you need to have a cover or maybe an uua for some for some of the products out there that you are insured on side chains you have the cover on ethereum but you also covered for now on the bsco polygon Etc so that's how the idea basically started we decided to come as an aggregator so basically we call ourselves sometimes we call us one inch of defy insurance all right so we build the app uh early last last summer it's live since and we have three Partners integrated with already so we have Nexus Mutual insurance and Bridge Mutual there are a few uh in the pipeline will be coming soon so basically people can come and compare the covers but since after that we decided okay so that that's clear right people can now compare but but the concept of decentralized insurance is basically quite interesting because it's not only about buying the cover or protecting their risks it's also about providing capital and buyer risk basically earned on their Capital that's what typical insurance company always been doing the only difference is that instead of the company we have a code right so people can as I said provide the capital and start earning on sales and again so if you heard the guys before they also have different ways of people Provide Capital and take the risks that's how actually idea of and we we thought about this for multiple months and we launched their the product the synthetic asset which called we call that uh bright Risk Index where basically under the hood people can provide the capital into there and we will distribute distribute the capital around across our partners right so you become the ultimate insurer and if you think about this it's just mind-blowing because so give an example of traditional Insurance there is the alliance out there and the munichery and this and that and and Delta Lloyd etc etc but there is no single way how you you is the individual could provide Capital to this insurance companies and and start earning some return yield that's exactly what we solve yeah so we're trying to make you know for you as an investor to replace insurance company we're trying to make that super easy so with a bright Risk Index I think he's setting up the presentation if you want you know if you're ready just let me know uh with the brightness index is the easiest safest and the most the first right way to act as an insurer so that means that you become a risk on a rider and um and right now this is a very unattractive uh investment opportunity because if you are an underwriter for instance anchor and anchor gets hacked you lose all of your collateral so what we build is a bright Risk Index and um it is integrated to three different risk partners and it will Diversified over more than 100 different risk protocols so it means it is a very interesting risk reward ratio so right now what we offer is an opportunity of 15 to 25 apy unstable coins um yeah let me uh take over hey guys Chris operational lead with bright Julian a bit of a impromptu speech so I was just on the bike rushing here to be on time unfortunately it was late uh the weather is getting cold as well so uh yeah you guys had uh we're very lucky here last week all right so bright Union right so we're trying to help shape the future of decentralized insurance from crypto coverage to metaverse asteroid collision insurance so we try to become the one inch for decentralized insurance um these guys already talked to you a bit about this and I go for me is now to explain a bit more about the bright Risk Index let me move over to that part of the presentation so the bright Risk Index is an investment opportunity within decentralized insurance right so the cool thing about D5 and distributed Ledger technology is that it can democratize a lot of activities in The Current financial space so if you look at insurance companies in general they have a pretty profitable business model to look at all the big buildings in all the cities in Stuttgart and Amsterdam the air homes the Mayas the Allianz all very profitable so that's why it's super cool that you can now act as an insurer but what is Paramount for insurance to work does anyone know here what's the key thing you need as an insurance company to thrive maybe kill you you know a little that's right I see someone here risk modeling yes that's that's a very important one not the one I'm looking for right now to be honest all right diversification the law of the great numbers right you need to have a risk portfolio that's so Diversified that a couple of big claims or events cannot wipe out all your Capital guys first vacation is key uh the cool thing about D5 is the Lego blocks everyone knows the composibility so what you currently see within decentralized insurance that too often it's not Diversified enough you can stake one-on-one on a pool with anchor a one-on-one in a pool with Ave or you can stake in a couple of pools but still the value at risk of your Capital can be quite significant so that's why we as an aggregator thought it was a good idea to build this super Diversified pool of risks so look at this picture what do you think probably the same as I do quite complex right I mean and that's what we do at Branch Union we try to make it simple for you so the Bri it works as follows you deposit die which is then put into a tokenized position the Bri and the die is subsequently deposited over three risk platforms and protocols in 150 risk pools so there you have it 150 risk pools means it's super Diversified not a single claim can have a material impact on your deposited amount the maximum value at risk with the big big big Black Swan event is only 12 and in return you get 15 to 25 apy annualized um what also is very cool about the Bri I'm a bit biased I know is that it helps solve one of the key issues in decentralized insurance decentralized insurance I think is one of the sectors within D5 which has the least traction up until now farming automated Market making lending everything skyrocketing and decentralized insurance is still trying to breach through to get Mass adoption but it still isn't there um I think I heard it Cynthia mentioned already in a bit a while ago one of the key challenges is capital because said it as well what do you need as an insurer Capital right so it's decentralized it's provisionless so you guys as a crypto Community can act as an insurer so why aren't you massively acting as an insurer does anyone here on the right risk pools is anyone investing in decentralized insurance I see two hands over there but quite frankly I know the guy so they don't count all right we believe one of our thesis is that because it's just not user friendly enough right so we all know it if you stake you have the withdrawal periods you have to cool down periods if you take your Capital out prematurely it's being slashed and let's be honest no one likes to put their Capital into custody of a smart contract they don't fully understand and grasp I think there's one and then two um it's the diversification it's super important to be Diversified as an insurer if you're not yeah your capital is just at risk so that's two and then the third one cash fees right staking unstaking ethereum we all know it it's a pain in the behind nobody likes it so that's why we with the Bri we pull the funds and we take it in efficient uh transactions for you so maybe a lot to take in uh key highlights bright Risk Index you can become a decentralized insurer in a diversified manner which is super user friendly and easy and it earns you around 15 to 25 API annually right maybe one nice comparison you see now with stock markets I know a bit of a dirty word here it's a bit in turmoil everyone's escaping from the high growth truck stocks illegal to invest in the more stable conservative stocks like utilities like energy providers like insurance companies now imagine here you can invest in an insurance company without all the administrative overhead you just invest in the risk pools which are out there with a super nice risk reward ratio all right I think there was enough feeling uh for now back to you guys yeah maybe some questions use the insurance yeah good question um I think that ties in a bit with what the lady said over here risk modeling what you often see with anchor is that the capacity is sold out right so with the underlying risk platforms they do the risk modeling right and they calculate how much Insurance can we give out given the capacity that we have so at some point it's just at a hard stop so I think right now it's like 200 billion of the capital in Anger is insured and not more so if something happens the US TD pegs or whatever there's a security breach those 200 million could well draw on the reinsurance but the remainder cannot and that's again one of the problems the Bri tends to solve just to boost the capacity um within the industry yeah good question I'll give that one to the techie who has a strong opinion on this doesn't matter in the fact actually it doesn't matter because as I said there are around eight positions that be that Bri actually invests into so three decentralized Insurance protocols all different currencies so under the hood we do swaps for seven out of eight so potentially we could add support of coins indeed anyway they'll be they will be swapped to Stables so it doesn't really matter we try to make it basically we start with low risk low return although return quite low high now unexpectedly but foreign yeah so we launched that with the idea of being the well offering best prices on the market so we don't charge anything on top from for the for the buyer so the whole idea was to have it always lowest cost actually it's even lower because we have some loyalty our loyalty internal loyalty system so we can even have discount on that so we one inch right so we are trying to make the most efficient and cheapest on the market so our earning model is from their protocols themselves we have the referrals and stuff like that yeah they're in the back no that's you yeah yeah it's about again about risk model and right we are talking about so there are I have a little bit of background with the solvency regulations or the idea of how to become solvent and so how to calculate the risks here under the hood and I okay the honest answer we don't know and even more understand so if ethereum is down because this merch is coming right I mean they basically all protocols will be hacked right it means the consent there is a cons it's called concentration risk right how concentrated it is we try to solve it not ideally but still we do a little bit of custodials right a little bit of defy mostly Blue Chips but a little bit of coins of coin protocols uh but it's still ethereum right so merge is there all down hopefully not but uh yeah or exactly well there is a a little bit less risk because it's like Bridges cross chain Bridges some of them are heavily rely on Wormhole uh the breach other other Bridges out there it is a huge concentration risk dye itself right I mean that's if dye is losing the pack we have you know all the rules how they will prevent the the liquidations and then the posts and then this that but if dye is down or stuff like that he'll that's a risk maybe to add on top of that I mean if you look at historically I think there were a couple of claims which were eligible and paid out on their insurance for example the bzx and the cream finance and then if you look at what amount was actually insured and what a percentage thereof was eligible for a payout was roughly around 10 percent and it has to do with a couple of factors one is that generally not all funds are exploited and you have to prove loss and then second you see some people already exited their position and they didn't were able to prove the requirements so you see that the amount that's actually being paid out is fairly limited so far but indeed if one of the if ethereum goes down yeah we don't know Black Swan event I think we all go home if that happens here right I mean so no we don't we take die he has been convert so there is we diversify over the protocols and the currencies so we have usdt usdc die and uh a little bit of nxm Nexus and a little bit of Ensure from insurance stuff like this but 80 90 more than 90 percent are in Stables but three three Stables die is why die at the first place well we are ethereum maximalist and blockchain maximalist honestly all it's all we don't have any server side we are fully on chain so we are maybe that's why we have chosen their most algorithmic let's say uh stable there's a base but yeah yeah good question the question is which also use a Euro stable coin no we don't no you're stable I'm not even sure what it is you're a stable right on my bank account anyway no sorry so it's not able to ask to decide which which Christian currencies to take so as I said under the hood we are dealing with the insurance protocols right the ones you've seen before over the time so whatever they whatever they use we just stick to that right so Does this answer your question perhaps not I have a feeling laughs I I think what we'll how we've received the future is that indeed there will be multiple versions of the Bri right I mean this is let's say V1 one basket but you can have a second basket and a third basket which can be based on European stable coins or which can be a bit more high risk or which can be for the anchor Deegan who think it will never get hacked we know many variations possible indeed but this is the initial setup we've chosen for now so we aggregate insurance companies right so we are not we are not dealing with the protocols themselves we are selling oh we are selling on behalf of these guys we are selling the covers insurance covers right so there again I mean they speak before but actually risk is unknown if they tell you that the risk of Ave being hacked is low that's not entirely true so if you if you ask any Quant out there from traditional Insurance world and you try to explain them how you how you measure the risk they will get crazy because honestly we don't know this freaking risks in D5 we don't know we don't have historical data we can't run Monte Carlo simulations we cannot do any anything out there right in best cases we know the team behind but not always the case even though it's just just crazy and honestly that's why perhaps the car the insurance it ensures the covers that people buy a quite expensive that from two to five percent of the capital so if you want to insure your million put into Ave then it will cost you 20 20 30 000 which is quite expensive if you compare it to the price you pay for your house or insurance so risks are unknown and we honestly be honest we are in the position that we don't have to solve it because these guys are solving it in a way they want I mean just stay on top and follow them follow the market but maybe to add again we do of course do diligence on our partners both operationally but also technically and our smart contracts are affected by security audits of course so yeah I mean security is very important we don't know how big the risks are something could always happen but we take it very seriously so I think that's also why we launched the Bri in a phased approach uh with security measures and then reaching a couple of Milestones increasing the investment Gap and after the audit now it's commercially available yeah two guys there yeah first the back one it was a little bit earlier yeah foreign so your question is what is the threshold when is it too much I personally feel that the cross chain Bridges will be a big Game Changer perhaps on all crypto Market because the cross chain Bridges the way how they implement it at the moment their honey pots they have restore a shitload of money out there and they honestly they implemented not in the best form they are all quite it's it's just I feel it's like like you know quick fix patch to this cross chain well the issue or probably currently encounter so I expect and as I said before the bridge or major Bridge hack might influence a lot yeah as I said ethereum maximal is basically my favorite one one was Wormhole and by irony that the one that was hacked and terrible actually but hopefully it will be back this is back I think we have time for one more question in the back uh sorry do you mean apy on their investment part we but since yeah so your question is how did you end up with the apy that uh I don't know uh it might be I mean if you calculate the basically is again 20 apy return is if you act as an insurance company right insurance company they earn a lot of a lot of money traditional ones right why because they they retired to come up with some risk models here they they leverage some positions because they once they diversify enough they can leverage because the risk is still uh fine and they still remain solvent uh honestly not I mean if you look now our partners that the return they get if you put money in it's a little bit or sometimes or some of them it's inflated by their own governance token typically I mean it's it's freaking defy right the return is actually is not this high they try to build up quickly the tvl over there to it's the capital right if your insurance protocol you need First Capital then you can sell you can sell before you have Capital right so in order to get a lot of capital especially for guys like Encore because they constantly have not enough Capital they inflate it a little bit with their own token whether it's good or not no not perhaps or at least not unsustainable it's different than sustainable and longer term but for the time they on the market for like a year then it's uh it's all right-ish so 20 honestly I noticed today we have API for like 50 but that's it's because of some some of our partners leverage money a little bit but it average is around 20 yes it will go down it will go to I expected like maybe 10. on the still fine time's up I believe all right thank you very much thanks for listening [Applause] [Music]