BBB Insurance Hedging
A Feature for Newly Launch Projects
Last updated
A Feature for Newly Launch Projects
Last updated
Users in web 3.0, especially crypto-based projects rely on their trust when investing both time and money into a project, the trust for a decentralized system, the trust for a “trustless system”, the trust for all the “minds and hands” behind a project.
As the bear market continues with many failures of big companies and unsustainable projects, it is a huge challenge for newly-launched projects to build and strengthen community trust.
Witnessing what is happening, the BBB team is developing a unique solution for newly launched projects addressing trust matters within their communities - known as BBB Insurance.
Insurance Hedging is a non-standardized hedging mechanism developed uniquely for BBB’s partners.
Simply put, BBB will serve as a platform to allow newly launched projects to deliver pre-event guarantees for future high-risk events and help users gain or maintain trust in the project. These risky events could be stated and guaranteed in the form of “Insurance Games” for projects to engage with community members.
This offers projects a cooler and more trustworthy way to interact and engage with their members rather than plain promising words. Economic incentives are in place to align the interests of members and boost trust within the mutual.
Insurance games are created with the definitive statement about any future high-risk events from the project with 2 funds - Insurance Pool and Insurance Share with its own participants as below
After an Insurance Game was created by an Insurer, the community members of a specific project will pay an Insurance Premium to buy a cover on the Insurance Share. After a set deadline for the game, the final result will be verified by the preferred Intermediary. The project will earn its community’s trust and extra revenue if the team successfully meets its solemn promises. On the other hand, if the promises are not being kept or unfortunate events take place, users will share the Insurance pool as compensation.
Important Note: Insurance game creation is not limited to only project owners but every community member who belongs to a certain web3 project is also welcome to create an Insurance game.
Take an example of the X GameFi project creating an Insurance game on the BBB platform. X is getting closer to one of its product milestones and would like to create heats for its launching, and at the same time, build trust with its community members. X then heads to the BBB platform and creates an Insurance game with a proposition: "The PvP game mode in the project roadmap will launch as scheduled on 14/02/2023".
If the PvP game mode is launched on time, Project X will gain both trust and potentially extra revenue from users purchasing “Insurance share”.
If it happens otherwise, members in the opposite pool, which is the Insurance Share, will share the Insurance pool’s fund as compensation.
The BBB platform, which only provides tools, financial security, and technical support, remains neutral and does not participate in any part of the insurance process, nor does it take any position or intervene in the setting of insurance events, the selection of intermediaries or the outcome of insurance events.
Insurance outcomes are determined solely by the intermediary and executed by the smart contract; the platform does not and cannot intervene.
The Platform does not and cannot guarantee the outcome of the arbitration, nor can the Platform confirm whether the outcome of the arbitration is the actual status of the project.
Insurers - Insurance Pool
Both Project and users/investors of the project can become an Insurer. In essence, insurers can create Insurance (Games) based on projects-related upcoming high-risk events and pledge to the Insurance Pool using cryptocurrencies which could be stable coins or project tokens in order to guarantee/cover the mentioned high-risk events.
Insurers can give priority rights to a designated specific group of users (Whitelist) who are eligible to participate for marketing purposes.
Insured - Insurance Share
On the other hand, the Insured or so-called Insurance Buyers are community members who pay an Insurance Premium to buy an Insurance Share and be insured against a wide variety of the aforementioned potential risks and earn compensation from the Insurance Pool.
Intermediary
An intermediary serves as a middleman between two parties and plays crucial roles as they will be responsible for the final outcome of an insurance game, typically a well-known Key Opinion Leader (aka KOL in modern days), or a community thought leader.
