FiDa - AI risk contract modelling and evaluation

[GENERAL] Name and surname of main applicant

Rodolfo Hansen

[GENERAL] Email address of main applicant

rhansen@kitsd.com

Additional applicants

The whole the FiDa Team.

Leads: Rodolfo Hansen, Andrew Bowness.

[GENERAL] Please specify how many months you expect your project to last (from 2-12 months)

9

[GENERAL] Please indicate if your proposal has been auto-translated into English from another language.

No

[GENERAL] Does your project have any dependencies on other organizations, technical or otherwise?

Yes

[GENERAL] If YES, please describe what the dependency is and why you believe it is essential for your project’s delivery. If NO, please write “No dependencies.” .

Yes, we will be working with and relying on the Xerberus Team as well as season underwriter partners to address the challenge of constructing a Risk Score for any given policy and portfolio.

[GENERAL] Will your project’s output/s be fully open source?

No

[GENERAL] If NO, please describe which outputs are not going to be open source. If YES, please write “Project will be fully open source.”

We do not see the main product outputs of this feature as something we can immediately share, but it is possible some of our research as well as any auxiliary code we write in conjunction with Xerberus will be released.

[METADATA] Category of Proposal

RealFi

[METADATA] SDG rating

10: Reduced Inequality

[IMPACT] Please describe your proposed solution.

Proving the FiDa Risk Transfer Protocol works as a Solvency II insurer will provide a benchmark for transparency and accountability for insurers under regulatory scrutiny anywhere. This will truly unlock capital efficiency for everyone, creating a more inclusive and equitable insurance landscape.

One of the key problems we aim to solve is the lack of capital willing or even able to allocate in the insurance market. Traditional insurance companies have dominated this sector due to overhead and upfront costs. As a result, many under-served communities and individuals face significant barriers in accessing adequate insurance coverage.

Our approach stands out by leveraging the decentralized nature of the Cardano Ecosystem to democratize insurance and promote financial inclusion. By implementing a Risk Transfer Protocol, we can empower a diverse range of stakeholders, including individual investors, small businesses, and community organizations, to participate in the insurance market. This inclusivity will not only unlock new sources of capital but also foster competition, driving down costs and expanding coverage options for individuals and communities that have historically been under-served.

[IMPACT] How does your proposed solution address the challenge and what benefits will this bring to the Cardano ecosystem?

Combining Insurance Tech and Machine Learning on the Cardano Ecosystem empowers Cardano's core values of sustainability, transparency, and inclusivity. By supporting this proposal, Cardano can demonstrate its commitment to leveraging blockchain technology to address pressing global challenges. By simplifying insurance solutions for underwriters and investors, Cardano can contribute significantly to achieving its goal and solidify its position as a leader in driving positive social impact.

The aims of the challenge that our proposal specifically addresses include expanding the Cardano community, strengthening the ecosystem, and solving a key problem within the insurance industry. By attracting users and stakeholders from the insurance sector, FiDa will bring new participants into the Cardano community, expanding its reach and diversifying its user base. The introduction of Insurance Tech to Cardano will enable the ecosystem to become stronger by unlocking new avenues of growth and innovation within the insurance industry.

The project's impact on the Cardano ecosystem goes beyond funding the project team. It brings tangible value by providing a real-world use case for Cardano's technology, demonstrating its scalability, security, and applicability to the insurance sector. FiDa has the potential to attract significant usage and transactions within a reasonable time-frame. While specific numbers may vary based on market adoption and external factors, we expect FiDa to attract a substantial number of users and facilitate a considerable volume of insurance-related transactions.

Having a Risk Diversification Rating will increase the protocol's capital efficiency, and consequently raise the attractiveness and yield for the TVL on the protocol and Cardano blockchain in a sustainable manner.

The introduction of FiDa and Insurance Tech to the Cardano ecosystem will position Cardano as a leading blockchain platform for insurance solutions. It will foster partnerships with insurance companies, brokers, and investors, further strengthening the ecosystem's reputation and reach. Additionally, by addressing the challenges of limited capital allocation and competitiveness for smaller investors in the insurance market, FiDa will promote financial inclusion and reduce inequality, aligning with Cardano's core values.

[IMPACT] How do you intend to measure the success of your project?

Successfully demonstrating an under-collateralized insurance portfolio that would pass regulatory requirements for Solvency 2 regulations.

[IMPACT] Please describe your plans to share the outputs and results of your project?

The idea is to allow for the construction of market places on-top of this developed risk-transfer protocol that can meet Solvency II regulatory requirements. Particularly we will continue past the protocol onto a FiDa web application which brings in participants from the insurance space to handle their business on top of the Cardano Block Chain.

[CAPABILITY/ FEASIBILITY] What is your capability to deliver your project with high levels of trust and accountability?

We possess the necessary capabilities and track record to deliver our project with high levels of trust and accountability. We also recognize the need to leverage strategic partnerships in areas where we can accelerate delivery Our existing capabilities demonstrate why we are best suited to undertake this initiative and effectively manage the allocated funds.

1. Technical Expertise: We are working with Developers from BinarApps who worked on Byron Network and are also contracting directly with IOG. With them, we have already made significant progress in the development of the Risk Transfer Protocol on Cardano. The pseudo-code for the protocol, utilizing the concepts available in Plutus is already written. Furthermore, we have already established a codebase for two of the validators in actual Plutus v2 The creation of which can be seen in these TX: . This technical expertise showcases our deep understanding of the Cardano ecosystem and our ability to leverage its features effectively.
2. Prior Commitment and Dedication: Despite limited resources and time constraints, we have been actively working on this project. Currently, we allocate around 4 hours a week to its development. However, with the Catalyst Fund support, we will be able to dedicate our full-time efforts to building out the contracts. This commitment demonstrates our passion and determination to deliver the project successfully.
3. Transparent Project Management: We have a clear project management structure in place to ensure transparency and accountability. We maintain regular communication channels to provide updates on the project's progress, milestones achieved, and any challenges faced. By adopting an open and collaborative approach, we foster trust and accountability among our team members and stakeholders.
4. Proper Fund Management: We recognize the importance of managing funds properly and maintaining financial integrity. To ensure this, we have established robust financial processes and controls. These include implementing clear budgeting procedures, tracking expenses, maintaining accurate records, and adhering to regulatory and compliance standards. We understand the responsibility associated with handling allocated funds and will prioritize their appropriate usage for the project's advancement.

[CAPABILITY/ FEASIBILITY] What are the main goals for the project and how will you validate if your approach is feasible?

The main objective is to demonstrate Solvency II compliance for the Fida Risk Transfer Insurance Platform.

[CAPABILITY/ FEASIBILITY] Please provide a detailed breakdown of your project’s milestones and each of the main tasks or activities to reach the milestone plus the expected timeline for the delivery.

The main milestone is FiDa Risk scores at multiple levels

1. Individual Contract Risk score
2. Investor Portfolio Risk score

[CAPABILITY/ FEASIBILITY] Please describe the deliverables, outputs and intended outcomes of each milestone.

The main deliverable is precisely a report on Solvency II as a final report for regulators.

[RESOURCES & VALUE FOR MONEY] Please provide a detailed budget breakdown of the proposed work and resources.

We will use the milestone payment mechanism internally to ensure costs do not escalate beyond our request and further enhance our engagement towards successful outcomes.

The team will be organized and budgeted as follows:

• Product Manager $17,820.00
• Architect $17,820.00
• Backend + Plutus Developer $54,000.00
• Automated Tester $9,000.00
• Data Scientist $54,000.00

Additional costs will be handled as needed out of pocket e.g. server costs, incidentals, etc..

[RESOURCES & VALUE FOR MONEY] How does the cost of the project represent value for money for the Cardano ecosystem?

The cost of the project represents value for money for the Cardano ecosystem in several ways:

1. Potential Impact: By bringing Insurance Tech to the Cardano Ecosystem through a Risk Transfer Protocol, the project has the potential to unlock significant value and opportunities. Insurance technology can provide greater financial inclusivity, risk mitigation, and economic stability, aligning with the goals of reducing inequality. The long-term benefits and positive impact of this integration can outweigh the initial costs.
2. Market Potential: The insurance industry is a multi-trillion-dollar market globally. By leveraging the Cardano Ecosystem to introduce Insurance Tech, there is an opportunity to tap into this market and create new revenue streams. The costs associated with the project are justified by the potential market growth, attracting new participants, and expanding the ecosystem's reach.
3. Future Returns: While the upfront costs may seem significant, they are an investment in the future growth and development of the Cardano ecosystem. The integration of Insurance Tech can attract new users, increase transaction volumes, and enhance the overall ecosystem's productivity and value. The long-term returns and benefits generated by this project can far exceed the initial expenditure.

Regarding the costs of the project, they have been carefully assessed and justified based on various factors:

1. Research and Development Efforts: The costs associated with research and development, including the design and implementation of the Risk Transfer Protocol, have been evaluated based on the complexity of the project, the expertise required, and the time commitment involved. These costs are aligned with industry standards and reflect the resources necessary to deliver a robust and effective solution.
2. Technical Expertise: The project requires specialized technical skills, particularly in Plutus and Cardano's development environment. The costs associated with hiring or engaging technical experts are based on prevailing freelance rates, industry benchmarks, and the level of expertise required to ensure the project's successful implementation.
3. Testing and Security: Rigorous testing and security measures are essential to validate the feasibility and reliability of the Risk Transfer Protocol. The costs associated with testing, audits, and security assessments reflect the investment needed to ensure a secure and trustworthy solution, aligning with industry best practices.

The costs of the project have been determined by considering the value it brings to the Cardano ecosystem, the potential impact on reducing inequality, the market potential, and the investment required for research, development, and security. While the costs may appear high, they are justifiable based on the long-term benefits, potential returns, and the value proposition that Insurance Tech integration can offer to the Cardano ecosystem.

[IMPORTANT NOTE] The Applicant agreed to Fund10 rules and also that data in the Submission Form and other data provided by the project team during the course of the project will be publicly available.

I Accept