Hedgefy Protocol Explained
Three Pilars
DAO Insurance Covering Pool
Decentralized Marketplace
HEDGEFY Jury Protocol (phase 2)
HEDGEFY Insurance Covering Pool
What is it?
The pool is funded by liquidity providers who stake their capital for the commitment period. The liquidity providers will receive ownership NFT.
The NFT holders participate in DAO governance process. DAO board will make decisions on insurance covering (i.e., which communities the pool will provide insurance to).
The staked funds will be returned to NFT holders after the commitement period after deducting loss from insurance covering activities.
Artist partners participate in the pool through their artworks. The artworks will be revealed on the NFTs after the commitment period.
Who participates in the Insurance Covering pool?
Liquidity Providers
They provide capital to the pool. The capital will be staked for a commtment period. The liquidity providers will be given ownership NFTs. The NFT holders are able to participate in the governance process. After the commitment period, the pool will be dissolved. The staked capital will be returned to the NFT holders after deducting loss from the risk covering activities.
DAO Board
The ownership NFT holders vote on the board The board's role is making right investment decisions on insurance covering. The goal is not making loss, and thus the pool can continue to cover risk of vulnerable communities in a sustainable way.
Donors see posting about insurance needs on the HEDGEFY platform and make donation to the premium so that vulnerable communities can receive insurance protection. If no natural disaster event happnes. the premium will be sent to the pool and be used as capital for other communities.
Artist Partners
The artist partners help the pool's fundraising by contributing their artwork to onwership NFTs. The ownership NFT's roylaty will be used to cover expenses of the partners' work.
The Ecosystem of the Insurance Covering pool
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HEDGEFY Insurance Covering Pool
What is it?
Hedgefy marketplace enables anybody to create and post their insurance needs based on Hedgefy's standardized parametric conditions (e.g., rain(flood), snow, covid, wind(hurricane) on any GPS coordindates).
Hedgefy marketplace provides historical data and probability models to risk coverers (insurance sellers) so that more sellers can participate even without their own underwriting capacity.
Pricing is determined by the interaction of risk coverers and buyers in the market through the real-time bidding process.
The openmarket structure increases competition among the insurance sellers, which will bring benefit to insurance buyers through lower pricing. All the transactions are recorded on the blockcahin for maximum transparency.
What are the core components of the system?
Data providers
HEDGEFY uses multiple data sources. On top of weather agency's data, Hedgefy is working on partnership with satellite weather data providers. All the data points used for calim decision will be recorded on the blockchain.
Oracle infrastructure
Oracle infrastructure is used to record offchain data on blockchain. As the data points used for claim decision are recorded on blockchain, Hedgefy tries to achieve maximum transparency.
Probability Model
Hedgefy probability model will provide 20yr data and estimated probabilty for claim trigger condition. This will help market participants reach to agreemets on pricing.
Smart Contract
Smart contracts run all the transactions. There will be no parties playing a custodian role of collateralized crypto assets.
The Ecosystem of the Marketplace Platform