A new path of decentralized insurance driven by consensus and algorithm
NodeDAO released the DeFi 2.0 mechanism with the new features of DAO+insurance. NodeDAO will build a DAO-oriented Vault with vault as the core. Vault is a DeFi 2.0 repository for storing various assets such as LPtoken, mainstream assets and stablecoins. It earns income by investing in agriculture and supporting valuable projects. These revenues will be distributed to NEI holders through DAO governance.
The native NodeDAO token is NEI. NEI can only be minted or destroyed by the protocol, and the holders have the right to vote on new developments and changes to the protocol, NED is backed by a basket of assets in the vault, and every 1 NED is backed by 1 USDT, without being hooked. When the price of the NEI falls below 1 USDT, the protocol will buy back and destroy the NED. Therefore, NEI can be circulated in the protocol for a long time at a price higher than 1 USDT, which has an obvious upside potential, but of course the price of NEI is ultimately determined by the supply and demand in the market.
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Moreover, in the specific operation of NodeDAO, it holds all the funds collected by the protocol: for example, if a user purchases a USDT bond, the vault will collect the full amount of USDT and exchange it for the equivalent NEI. The new NEI will be cast based on the risk-free value (RFV) of the assets in the vault.
The funds in the vault are governed by a protocol, and NEIs can only be minted or destroyed by the protocol. When the price of the NEI falls below 1 USDT, the protocol will buy back with the funds held in the vault and destroy the NEI. The vault will work with various protocols, and initially NodeDAO will launch an insurance product. The premiums for insurance are one of the sources of assets for the vault. In the future, the vault will be financed by more cooperative projects, however, all vault funds will be used only to support NEI asset prices.
With the increase in vault revenues, the supporting price of 1USDT will also increase, thereby contributing to the appreciation of the NEI price.
The NodeDAO platform consists of an application layer, a settlement layer, a pool aggregation protocol Networks, with complete functionality. It employs the NIE Hub cross-chain solution to address the problem of asset decentralization by mapping all assets with stablecoins to the BSC network, and the existing solution is made up of the O3 Hub cross-chain pool and polynetwork. These functional components have significantly reduced the cost of making insurance products, improved the efficiency of insurance, and broken the application bottleneck.
Dual drive for insurance investment through DAO governance
Besides personalizing the platform, NodeDAO also adopts DAO governance to further reduce costs and improve efficiency, including the governance of NodeDAO parameters (proportion of fees charged, determination of parameters of insurance pricing model, etc.), vault revenue dividends, token NEI increment, governance of cooperative projects and project development, etc. The governor can decide the directions of project development and resource investment via voting.
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A large part of the cost of insurance involves loss assessment and settlement. Traditional centralized insurance suffers from problems such as unclear liability determination and unclear clause design, and invests heavily in risk control. NodeDAO introduces a three-step assessment approach. The new product launch part starts with assessment by experts, who are responsible for assessing the project risks and the need to output specific incident reports for community governors to assess the risks in case of contractual security issues. This is followed by a community-based evaluation, in which volunteers from the community further assess the evaluation based on an Advisory Board, and participating users are rewarded with INSUR tokens. It is finally subject to continuous updating and will continuously assess and adjust its risk level based on the data and information collected. Claims assessment will be handled jointly by the Advisory Board and the community claims assessors through surveys and community votes. Participating parties are coordinated through DAO governance to further improve efficiency.
In addition, full consideration is given to taking into account the sustainability of the benefits to the underwriters. For underwriters who provide underwriting funds, such a model is difficult to sustain if their revenue is not as satisfactory as the pledged revenue from other DeFi agreements. NodeDAO further enhances the returns of contractors and expands the source of funds for a dual drive of insurance and investment through DAO governance.
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