Insurance & Reinsurance Through Restaking From Eric Waisanen AlphaGrowth

Transcript

[Music] Good Morning eth Denver my name is Eric weisen I'm here to talk about product Market fit for reaking and why it is going to Boom as an industry beyond what crypto has done so far little bit of background I run defi operations and tokenomics for Alpha growth my background is in economic philosophy and I've focused the last four or five years on centralized business and on monetization we're really good as a space at building science fair projects building new ways to do new things but we struggle at obviously getting real business integrated getting real Revenue growing

real sales and so uh we found a pretty cool way to do that we've got some projects that are working on it today I'll go over reaking a brief overview talk about insurance show why they're a perfect fit together as a new business narrative and then go over a couple examples with IAL insurance as well as defi insurance so what is reaking you guys have all heard the term by now plenty of companies raise a whole bunch of money on it as a narrative um but walk through the history we start off with staking you know ethereum eventually makes a switch you stake ethereum that's how you provide security to the network but now you're giving up the opportunity costs of liquidity and being able to participate in defi so Lio

and rocket pool and a bunch of other service providers create lsts or liquid staking tokens so now yes you're securing the network but you also get to take active like take action in uh defi but then the next step was security hypothecation this is what Igan layer figured out and this is you take that new liquid staking token and you restake it and now you're providing Security in a second place at the same time and they they they did this in theory you know it's boomed over the last 2 three years I think the story is 3 years ago uh who we just saw here a little bit ago was struggling to get in here and now obviously igen lay is one of the biggest names in ethereum um but he made this possible and now it's our job to figure out how to make this work for the

business and so fundamentally the benefit of this hypothecated security is access to Capital keep that in mind we're going to come back to it access to Capital so who are the clients of reaking right now you may have heard the term AVS which is an actively validated service um I helped design King protocol if you've heard of them working with ethery and a a whole bunch of the primary LRT providers to uh be able to wrap all of these different rewards from all of these different avss who come in and do rent security uh but one of the one of the fud or the arguments around this is like oh so this is just going to be new tokens or with maybe you know low

float High fdv the the things that we've been burnt by before paying out in their native token to rent security not doing anything with it like how do you get real money how do you get real yields we're talking about real th right where does it become substantial and right now this is a hole that is not fixed switching for a bit what is insurance insurance it's kind of like a shared savings account but with a shared savings account you'd start at zero and work your way up with insurance you need money right away right so it's like a shared savings account that starts High um this brings us back to access to Capital Insurance is kind of like an

open loan a line of credit if you will that becomes a shared savings account once it's paid off insurance is a different form of access to Capital and it's masked as private sector um but I've got some issues with that again economic philosophy if you go into monetary Theory or economics you know e economics found fundamentally is is how to distribute scarce resources and the private sector creates resources they they're finite but they're not fixed so um private sector creates resources hey insurance is private sector right isn't that great but public sector will then distribute resources more effectively everything's private sector you get crony capitalism

more resources distributed incredibly inefficiently if you go full public sector you get communism uh minimal resources distributed very equitably we're all equally poor um we need something better and by trying to make insurance companies more fair the public sector has forced everybody to buy them and created a captive audience you all have insurance I have insurance a bunch of different types of insurance we have to to live our daily lives and the processes that bureaucracy or public sector have used to make us purchase this uh the you know um The Profit caps that insurance companies

have actually force them to operate purposefully inefficiently just based on the game theory in order to make more profit and like they're all C Corps literally their entire obligation is to maximize profits like and only thinking one year ahead at a time so we have Force inefficiency and ineffectiveness and it's destroying insurance and we have a new opportunity so I walked through who are the clients for um for reaking providers there are a couple but right now it's lacking it's not enough to justify the current valuations let alone increase we need to do better but who are the providers for insurance

United siga Etna that's health insurance how about big Banks yeah not not everybody's favorite people not everybody who's aligned to help the people who are you know being taken care of deny deposit depose so let's start with our first example I so we'll get into medical insurance and defi Insurance could we decentralize health insurance could we match the access to Capital available through reaking to the access of capital required by these insurance companies we're going to look a little bit at health insurance health insurance

companies also have insurance you guys know insurance companies have insurance that is called reinsurance it goes levels and levels and levels typically a health insurance company will have two types of health insurance at least uh stop loss Insurance to make sure that they don't assume all of the risk in case somebody cost $250 billion or something um the two types are aggregate this would be you know in your opinion uh for your personal health insurance you're like max out of pocket the second would be spec or specific stop- loss this would be like you're deductible um this would be the max allocation for a single person and when you're paying your Healthcare premium the cost of these that go to your insurance provider if you've got Sigma

or United um these costs are baked into your premium because they're paying their reinsurance providers for both of these things however looking over these models we believe and we do in fact have a product where we can get rid of the spec Insurance charge less for the a and save a whole bunch of money for operations through using igen lay and its associated property projects instead for a line of credit here on the screen I've got the max a insurance think of this as a healthcare company that's got say 100,000 members on it and so maybe we have a stop loss insurance that anything higher than 60 million doll um

is going to be covered by a reinsurance provider and right now that's still trafi so we've got a contract with you know State Farm or one of these other big Banks we don't have a spec Insurance here and we do know we've got the ARR the returning revenue of healthcare premiums and so if we have a Max expense of like 60 million and we know we're going to make I don't know 100 million uh I'll make the numbers 80 and 120 million it works better for a calendar uh so we we can only spend $80 million Max we know we're going to make $120 million we we can for sure say at the end of one year we've made at least $40 million in profit maybe operational overhead is 20 million of that so then it would only be

20 million profit but you know that there is a minimum profit that can be made the only risk now is if you hit this aggregate early if you know a third of your patients end up having heart attacks in the first couple months and you have to dip into this line of credit that's available early on so so what we need now is a potential line of credit to protect us from early claims and we can guarantee profit at the end of the year so what is a reloc guys have heard of hilock I assume a home equity line of credit well we're saying a reaking line of

credit this is helping our insurance products it's not Insurance directly in and of itself but it is providing the access to Capital required for a normal insurance company to be able to underwrite the plans that they're offering if we then strike a deal with a reinsurance uh with a LRT provider for a line of credit we can underwrite it with legal contracts talking about mix of legal and and smart contracts now and we can predefine when can slashings occur when can you pull off draw Downs where you take some of the capital originally and you can lock up the participants whitelist even the participants for

who's allowed to earn this yield and maybe we say hey we can give you guys 12% APR over one year you just have to keep your funds locked over a year if expenses are lower maybe it even goes higher than that but now we can guarantee real yield and the profits that currently go to insurance companies and the current providers of insurance can go to you if you're saking ethereum and your operators opting in to things that might be slashed but but are going to end with a higher net yield than the people who are just you know right now a lot of reaking is kind of a meme uh not even all of slashing is available so congrats you operated a node properly like what we're talking about is real business the the specialty isn't the

node operation the specialty is the contract and the services and the capital that's being allocated fundamentally this turns into an entire New Market type every type of insurance can exist every type of customer can be serviced any LRT provider any uh wallet operator for these lrts can be as risk on as they're willing to underwrite for their users we get a whole new moody this is real business trafi becomes an AVS AVS the clients of LRT providers oh what kind of yield are we going to get well maybe points we get our eth and then we can get some governance tokens

talking about getting paid in Cold Hard Cash I'm saying if we pay 10% per year for this insurance company at a guaranteed profit that I'd rather give that 10% to people staking eth working more transparently working more efficiently uh getting rid of the company blo getting rid of the six-month payment times and saving a whole bunch of money while running business right this is not just the right time for this technically now that the pieces are in place for this to work this is the right time for it socially as everyone is acutely aware of how insurance companies are running and how terrible service is I'm not going to get too far into products right now but if any of this stuff interested you guys I'd love to

talk to people afterwards there are real Pro real projects working on these real products I'm talking about and that's good for health insurance what about defi is defi doomed is it just going to be governance tokens on governance tokens narrative after narrative monkey pictures what's oev this new stuff coming out defi has not brought in the trafi money we're waiting for it we're wanting it everybody knows we need it but I'm sure we've seen a bunch of presentations here um this this trip about like how we can do trading a little bit better and what is going to say that hey we're going to bring in hedge funds to start managing their funds on chain where where's that what is stopping it and

alha growth basically what we um H have come to terms with especially dealing with family offices dealing with um sometimes even nation state players of of what it would take to have them start using say compound which we work with um start using compound instead of Bank of America and what they're what it boils down to is they need to get rid of contract risk get rid of variable rate risk and get rid of regulatory risk well regardless of your political opinion I think we can all agree the current presidential regime regime Now is better on the regulatory risk side uh depending on the country you live in there are some better opportunities than others but we're all working on it there's

lobbying going on we need to Lord knows get better laws uh and education uh to people who don't really know what emails are uh up in Congress but we're working on the regulatory risk side we've got protocols built that let you switch variable rate for fixed rate why do uh people buy bonds from Michael sailor at a 50% premium on bitcoin it's because their funds can only purchase and operate in bonds so they take what risks and rewards they can with what they're legally allowed to and many many many of these funds and firms are not allowed to dabble in variable rate risk we cannot ourselves fix V like fix the variable rate risk so protocols that can enable this uh kind of OTC swap reduce that

risk but how do you fix contract risk and I'm sure you guys are getting to it you can ensure it what can you Ensure you can insure anything protocol tvl what if all of the tvl on compound was insured what if just I launched a meme coin but I insured the insurance of that uh of that liquidity I mean it might be difficult to get ether to underwrite it or to get an operator to buy in but any of this stuff is now possible uh I hopefully you guys have seen metamask uh showcase their new debit cards well debit cards have to be kyc if you're kyc you can't really be

cable so what if we launch our own FDIC account and it's got higher Insurance per user and higher yield than a traditional checking account without even needing the government to back it Bridges we've seen Bridge hacks heck you can probably even get operators to underwrite bridge hypothecation making Bridges profitable to the ecosystems that attract tvl bad debt we've all seen defi protocols that weren't as safe as we were led to believe stability pool pegs uh smos we can Ure anything this is an entirely New Market so that is it for the time I've got with a teaser I would love if anybody has any questions or would like

to talk to me more yes sir yes he asked what is the next biggest asset or industry that is going to be insured and I believe it is going to start with medical insurance um I think that that will happen maybe in tandem with defi but I think we're closer to medical insurance being possible and existing now than many of you guys realize um and that will help capture the narrative to spread onto defi as these pay rails get built in I mean we need entirely new service providers for this to exist we need actuaries to come in we need every

LRT provider to become an insurance company and uh operators to figure out uh whose Moody system if you will uh they'll use to determine what to underwrite and what not to this is work I've been doing for the last five six months so we got a little bit of a head start um but it's a narrative that is inevitable and that we very very much need on ethereum cool if you guys have any other questions I apparently got two minutes but uh other than that I happy to talk off uh off stage other than that I'd love to hear what you guys would like Insurance in and who you and who you'd like to

buy hey thanks for that talk it's really interesting um is there a risk that the people who are putting up their their uh restake tokens uh as collateral is there a risk they get liquidated because somebody the insurance is needed or you know you talked about if we have too many claims early in the year there's this Gap so if that happens do those restake tokens get liquidated to cover the debt and how does the person get reimbursed so it depends on the pool and the agreement that the potential agreement that I showcased in the example yes it is possible which is why we would ask for a 12-month lockup period um we want to avoid gamification which again Dynamic Market anything could be set up but for real business

contracts we would like to avoid gamification of pulling out your stake before getting slash depositing afterwards to collect rewards so something like a one-year lockup of what funds are enabled that way you know if you got SL 60% because it was a terrible first two months of the fiscal year then those people will still be made more than whole based on basically the bond that they agreed to when they first came in can you tell us a little bit about your vision for how you foree closer sorry um can you tell us a little bit about your vision for how you foresee Mass adaptation in health health

insurance what like what would that take the first steps thank you um you may have heard of opis they're one example um they've been doing health insurance reselling for six or seven years um reselling is great in order to get Mass adoption you need an actual insurance company um that doesn't just resell that creates the policies to create the policies you need to get a minimum of 10,000 members signed up I have helped towards the process of companies being able to do this um and we anticipate towards the end of this year when open enrollment comes to most people getting a significantly larger number of people than that on an insurance plan by being able to

underwrite an insurance plan that operates significantly cheaper than others even with a wide product uh even with a wide margin uh we can undercut existing providers get employe employers to come over and sign up for their employees save 20 30% on their coverage and then as we get those uh definitive ARR from the premiums now we yeah we need that deal in place so it's a little bit of a chicken and egg we need the deal lined up to be able to get the the belly buttons on a plan uh but at the same time um when we get the belly buttons on the plan it makes the deal worth it so the right parties are um are talking this isn't uh new it's been in the works

cool thank you guys very much for your time