CoverCrypto: Cardano NFTs as cryptoasset insurance documentation

[GENERAL] Name and surname of main applicant

CoverCrypto (Con E.)

[GENERAL] Are you delivering this project as an individual or as an entity (whether formally incorporated or not)

Entity (Incorporated)

[GENERAL] Co-proposers and additional applicants

CoverCrypto is a trading name of Redefind Ltd. Redefind Ltd is an FCA (and BaFin in Q4 2024) regulated insurance provider for digital assets. Redefind Ltd is registered in England and Wales under company number 14884458, registered office at 40 Lime Street, London, EC3M 7AW. 

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

5

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

No

[GENERAL] Summarize your solution to the problem (200-character limit including spaces)

Issuing insurance documentation as an NFT ensures immediate, immutable access and is engaging to a digital audience. It is environmentally friendly, reducing the carbon impact of paper documentation.

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

No

[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.”

No dependencies

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

Yes

[GENERAL] Please provide here more information on the open source status of your project outputs

MIT License

We will make our NFT capability open source so that other insurance providers, whether traditional Web2 insurers or innovative Web3 solutions, can offer this functionality to their users.

[METADATA] SDG rating

• Industry, innovation and infrastructure (SDG no.9)

[SOLUTION] Please describe your proposed solution

Setting the scene - about CoverCrypto

CoverCrypto is the annual subscription that covers the cost of returning stolen cryptocurrencies, NFTs and tokens. Insured by Lloyd’s of London.

Problem

Currently, insurance documentation is delivered by emails, PDFs, and paper. This clunky, unengaging documentation can be easily lost (causing inconvenience), is slow and inefficient. Blockchain offers a fast, immutable, and secure alternative. 

Solution

Issuing insurance documentation as an NFT ensures immediate, immutable access and is engaging to a digital audience. It is environmentally friendly, reducing the carbon impact of paper documentation.

Reasons for our approach

Industry leaders like ConsenSys recognise the insurance industry as one which could greatly benefit from blockchain technology. Providing our proposed grant solution for the insurance industry is the tip of the iceberg for the potential applications in this sector. 

Benefits to Cardano

Our goal is that the insurance industry would begin to adopt Cardano's blockchain technology for a wider breadth of use cases beyond that of CoverCrypto. We see this grant as the start of the insurance industry finally waking up to blockchain, and recognising Cardano as the provider that can cater for the needs of this industry. Proposed future insurance use cases are plentiful: 

• Settlement of premiums across insurers and reinsurers, ultimately allowing insurers greater integration and removing layers of intermediaries and improving insurance value to consumers
• Immutable records and accessibility of data allowing a faster claims settlement and stripping out layers of costs meaning that claims are settled faster and premiums are reduced, as it stands around 50% of insurance premiums are administration and intermediary costs
• Immutability of data and transparency of records in a public environment allowing stringer pricing and higher competition pushing costs lower
• Ultimately contributing to a decentralised risk exchange where insureds can share their data and encourage a competitive tendering process

Post-MVP grant

Our proposed grant is to develop an MVP solution (insurance documentation in the form of an NFT) which can be used by CoverCrypto customers (launching in Q3 2024) and may expand to traditional insurance (car, home) in the future. Long term, we see our product engaging many stakeholders and solutions across the insurance industry (customers, brokers and insurers), and provide the Cardano ecosystem with exposure to an industry which has been slow to adopt innovative blockchain technology. Ultimately, we see this MVP laying the foundation for both future NFT and Insurance use cases built on Cardano.

About CoverCrypto

CoverCrypto is an annual subscription that covers the cost of returning stolen cryptocurrencies, NFTs and tokens, fully insured by Lloyd’s of London. For a deeper dive into our solution, please see both our app screenshots below and our White Paper.

Clarifying points regarding the MVP

• Is claiming the insurance NFT necessary to review or access your policy?

No, it is not necessary, it is the equivalent of current insurance documentation being delivered both by post and by email, but a much more modern version!

• Are the NFTs tradable? If so, do I need it to claim on my policy?

Yes the NFTs can be traded freely, but they will not be redeemable for any insurance or CoverCrypto subscription benefits. Only policyholders will be entitled to the benefits owed to them under their insurance or subscription.

• What happens if my wallet is hacked and my NFT is stolen or i've lost the seed phrase to my wallet where the NFT is?

The NFT does not constitute the cover itself, it is a representation of cover. You will still be able to receive all your subscription benefits

[IMPACT] Please define the positive impact your project will have on the wider Cardano community

When users purchase a CoverCrypto subscription, they will be able claim their insurance certification/documentation as an NFT, requiring the user to engage with Cardano to access this critical documentation. This interaction is expected to increase Cardano engagement among non-Cardano users (for instance, a CoverCrypto user covering their Bitcoin holdings would need to interact with Cardano to receive their insurance documentation NFT).

CoverCrypto provides insurance as a service for cryptoasset holders, integrated with leading blockchains such as Cardano, Bitcoin, Ethereum, and wallets including Ledger, Trezor, and Tangem. 

We will measure the impact by tracking the number of NFTs redeemed by CoverCrypto users and share this metric publicly on a dashboard to showcase the results.

This project also serves as an initial pilot into blockchain technology for the general insurance industry, and will showcase the capability of the Cardano blockchain. We hope that our successful implementation of this use case will attract other insurance projects and use cases to Cardano, and we will be an active voice to encourage this.

[CAPABILITY & FEASIBILITY] What is your capability to deliver your project with high levels of trust and accountability? How do you intend to validate if your approach is feasible?

We have already successfully implemented a number of integrations across a number of cryptocurrencies into the CoverCrypto application (on track to launch in Q3 2024). Our integrations to date include ADA on Ledger, Trezor and Coinbase (alongside other major top 10 blockchains). This new ‘redeem NFT’ feature will be an addition to the infrastructure that is already in place for our web application.

Regarding fund management, as a regulated business, Redefind (CoverCrypto is a trading name of Redefind Ltd) has had to go through stringent auditing and had to demonstrate our financial prudence and corporate governance controls (to risk carriers and the FCA/BaFin).

[PROJECT MILESTONES] What are the key milestones you need to achieve in order to complete your project successfully?

Design & planning (1)

This first milestone will design the graphic for the NFTs, design the user journey for the redeeming of the NFT, and write out the instructions on how our users can redeem after they purchase a CoverCrypto subscription.

Milestone output(s)

• NFT design across the 3 CoverCrypto tiers (Fish, Dolphin, Whale) and attribute metadata
• Design of life cycle journey of the redeeming of the NFT
• Instructions on how customers can redeem their NFT

Acceptance criteria 

• High quality image files of the NFT designs across the 3 CoverCrypto tiers (Fish, Dolphin, Whale) and highlight the metadata
• Detailed user journey of the technology flow (how the NFT can be redeemed as a part of the CoverCrypto user journey) 
• Instructions for redeeming the NFT

Obtaining regulatory sign off (2)

Preparing the presentation documentation for regulatory signoff as to whether NFTs for insurance documentation is in adherence with regulations, including legal opinion. 

Milestone output(s)

• Develop the powerpoint presentation for regulators 
• Regulatory advice and structuring - engaging law firm to provide advice (CMS)

Acceptance criteria 

• Presentation of the powerpoint presentation
• Present the results of whether NFTs are permitted in adherence with insurance regulations

Development (3)

Developing the NFT solution and integrating it within the existing CoverCrypto web application and regulatory reporting back office system.

Milestone output(s)

• Developing the redeem NFT solution
• Integrating NFT solution with CoverCrypto app
• Integrating NFT solution with CoverCrypto regulatory back office system

Acceptance criteria 

• Present the completed 3 elements above in an end-to-end user journey flow video

Testing & marketing (4)

Testing the code to ensure that users can only redeem one NFT per subscription, that the NFT solution works as intended and that the underlying app works seamlessly with this new feature. The marketing element of this milestone will help advertise Cardano as the blockchain of choice for the insurance industry. 

Milestone output(s)

• Beta testing with Cardano community members
• Marketing for Cardano in insurance industry (engage digital marketing agency and work to create content specific to Cardano and the insurance industry)

Acceptance criteria 

• Proof of marketing achievements (articles and press releases)

N/A

Completion Report and Video (Final)

Create a quality, narrated video of a user signing up to CoverCrypto, purchasing their cryptoasset cover and then redeeming the CoverCrypto NFT on Cardano to prove their cover. This will complete the MVP.

[RESOURCES] Who is in the project team and what are their roles?

Rich D., Founder & CEO

Over 25 years of experience in complex international insurance (Aon, Brit, R.K Harrison, Chubb). Voted most influential CEO 2024 (Web3 Insurance) by CEO Monthly. Linkedin

Con E., CPO

Experience working within the digital asset sector, having worked for both cryptocurrency projects and a private blockchain company. Certificate of Insurance (CII) and Certified advanced digital asset investigator (TRM Labs). Linkedin

Andy V., Software engineer

Experienced full-stack engineer who has worked on cryptocurrency web applications.

Alex M., Graphic designer 

Graphic designer who has developed the CoverCrypto website and web application to date. 

Full-stack developer, unidentified

We will be hiring a full-stack engineer to help Andy with the work on milestone 3. 

Blockchain engineer, unidentified

Build the blockchain NFT solution on Cardano. We will be aiming to recruit this individual from the Cardano community.

Advisors/project managers, Exponentialpartners.io

Exponential Partners specialises in providing customised advisory services that cater to the unique needs and capabilities.

Regulatory advisor (CMS law firm)

Our chosen insurance lawyer to advise on whether NFTs are permissible with insurance regulators.

[BUDGET & COSTS] Please provide a cost breakdown of the proposed work and resources

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

Immediate benefits 

We believe this project offers great value by attracting other cryptoasset ecosystem members to the Cardano blockchain to redeem their NFT. CoverCrypto users will need to purchase ADA to redeem their NFT on Cardano. For example, if a user is insuring their Bitcoin Ledger and Solana Trezor accounts, they would need to acquire ADA to claim the CoverCrypto NFT insurance documentation. This would introduce new users to Cardano who might not have interacted with the blockchain otherwise, making them ADA holders and Cardano token holders. This would hopefully increase ADA's 24-hour volume stats, total number of holders and general on-chain activity.

Broader benefits

Additionally, we see value in positioning Cardano as a blockchain that supports the insurance industry. The insurance sector has been one of the slowest to adopt blockchain technology (Business Insurance, 2022), while sectors like finance and logistics have been proactive with the new technology. This creates an opportunity for Cardano to establish itself as a pro-insurance industry chain, much like Ripple's association with the payments and finance industry for example. 

Funding clarity

There is no allocation for the grant to support the costs of the existing team. All costs being applied for under the grant are going towards this additional NFT functionality, the costs of which are not within our current budget.