Finding Peak w/ Ryan Hanley - Jonathan Libby on Smart DeFI Insurance

Episode Date: September 9, 2021

Spartan philosophy, built in the black-ops lab of business: https://www.findingpeak.comFinding Peak podcast: https://linktr.ee/ryan_hanleyIn this episode of The Ryan Hanley Show, Ryan Hanley is joined by Jonathan Libby, founder of Steady State Finance, the smart Defi insurance company. Listen for an absolute nerd session on all things crypto, blockchain, decentralized finance (DeFi) and what the future holds for insurance.Episode Highlights:Jonathan explains what decentralized finance means. (5:06)Jonathan tells listeners what the role of DeFi will be in the future. (9:00)Jonathan explains how decentralized exchange effects the ecosystem. (13:16)How difficult is it to make changes within the Bitcoin community? (18:30)Jonathan details how to disrupt insurance and implement new concepts. (22:31)Jonathan gives listeners insight on how Steady State Finance operates. (26:46)What’s the process, if a consumer wants to be part of this? (32:49)Jonathan gives an example of what Steady State Finance can offer. (33:45)How did Jonathan get into this space? (36:16)Jonathan walks listeners through how he put several concepts together to build something significant. (38:22)Key Quotes:“I think in cryptocurrency... universal basic income, is for the first time is even actually possible, in a way that you can actually feasibly work, where people can all have a standard of life without sacrificing individual liberties.” - Jonathan Libby“We're almost building a model that prioritizes reinsurance. We move from reinsurance to actually sharing the protocols ourselves as they keep developing. And by us, I mean a deep centralized community, not run by me not run by anyone you know, directly...But, by the people.” - Jonathan Libby“My thought was...let's apply this. I'm like, this is the future. So, I started looking...How do I put together a bunch of concepts together and build something? Eventually, I met a very well known figure in the space, named Tim frost, from Yield app, and Yield app contracted me to build an insurance solution for them, and how to insure their portfolio to defy risk.” - Jonathan LibbyResources Mentioned:Jonathan Libby LinkedInSteady State FinanceReach out to Ryan Hanley--Recommended Tools for GrowthOpusClip: #1 AI video clipping and editing tool: https://link.ryanhanley.com/opusRiverside: HD Podcast & Video Software | Free Recording & Editing: https://link.ryanhanley.com/riversideWhisperFlow: Never waste time typing on your keyboard again: https://link.ryanhanley.com/whisperflowCaptionsApp: One app for all your social media video creation: https://link.ryanhanley.com/captionsappGoHighLevel: It's time to take your business workflow to the Next Level: https://link.ryanhanley.com/gohighlevelPerspective.co: The #1 funnel builder for lead generation: https://link.ryanhanley.com/perspective--Episodes You Might Enjoy:From $2 Million Loss to World-Class Entrepreneur: https://lnk.to/delkFrom One Man Shop to $200M in Revenue: https://lnk.to/tommymelloIs Psilocybin the Gateway to Self-Mastery? https://lnk.to/80upZ9This show is part of the Unplugged Studios Network — the infrastructure layer for serious creators. 👉 Learn more at https://unpluggedstudios.fm.Advertising Inquiries: https://redcircle.com/brandsPrivacy & Opt-Out: https://redcircle.com/privacy

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Consider subscribing, rating, and reviewing the show this holiday season. It really helps the show grow. From all of us at Believe, have a Merry Christmas, everyone, and a happy holiday. Food Laboratory in the basement of his home. Well, we want to welcome back to the show. Today we have an absolutely tremendous episode for you. I hope you're going to Crypto Blockchain because you are getting the full, frontal download in this episode. We are talking to Jonathan Libby, the founder of Steady State,

smart defy insurance. That's smart, decentralized finance insurance. It is absolutely incredible this conversation because it really is, it's like we've opened up the window in time and we're able to reach into the future and get a look at how the world operates. And Jonathan's incredibly smart dude doing some really dynamic, really interesting things. And this is just one of those episodes that you just sit back and download it. Just let it sink in. There's not a lot that you can actually take action on today necessarily from this episode. But it is absolutely going to expand your mind on what is possible and what is happening

out in the world of decentralized finance in general, crypto, cryptocurrency, and ultimately the place that insurance can have in all of it. It's a tremendous episode. You're going to love it. Before we get there, I want to give a big shout out to today's sponsor, Agency VA. Guys, I've been talking about Agency VA for over a year now. Just had the one-year anniversary of my VA. His name is Nat.

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With that, let's get on to Jonathan Libby from Steady State. Here we go. Well, hey, man, thanks for coming on the show. I appreciate you taking the time. I know you're a busy dude. I know you got a lot going on. You're in a very dynamic space, and I'm just incredibly excited to have you on the show. I'm excited to be here.

Awesome. So I was referred to you by Jeff Shee, who's been on the podcast as well. Good friend runs a tremendous organization in Quantum. And when he recommends someone, I obviously am very interesting because he doesn't, not the kind of guy to mess around. And then when I looked into what you're up to, I was like, well, this is like the coolest stuff going right now. And one of the more, and as we talked a little bit before we went live, you know, I think

maybe not tomorrow, but certainly in our future, one of the more, and I don't like to throw the word disruption or disrupt it, just, you know, anything just being disruptive around. But I do think Defi has a chance to make a significant and dynamic impact on how insurance operates, on how our world operates, frankly. I'd be lying if I said I hadn't bought, I hadn't re-upped to my stake of XRP about 15 minutes before we went live because I'm kind of a crackhead. But, you know, first of all, let's take a step back. What is decentralized finance? What is defy?

When you hear that term thrown around, let's kind of start at the basics and we'll build our way up. I think that's a great place to start. So decentralized finance, often it's called the defy, it's kind of doing everything we do actually normally in finance. rather than people handling the business, it runs an autonomous code fully. So we have this kind of idea. We understand how this is work, such a church professionals and finance or in any kind of

area, but a lot of normal people have an idea how things work. But when they start explaining to your job, you realize that I have no idea of what actually goes on to doing it. How D-Fi works is it runs off autonomous code where if you put money in, you can actually see step A, B, C, and D run naturally on a code system. And you can actually know what actually is going on. So what this kind of means is it's meant to like remove a lot of how people, a lot of the third party or intermediaries between getting some kind of achievement or an input output. And kind of like that's where it's where it's where it's kind of supposed to be versus trap by.

We have to go through intermediaries to get some kind of a solution or kind of solve something. Rather than that, it's supposed to just be one on a one-to-one ratio where someone has an input, someone has an output and it just goes there with another third party group. And it's kind of like a really unique aspect in the industry where we've always had that. if we're trying to figure out how does it work and what's the value at there? Because if you're a banker, okay, you're trying to give out a loan, let's say, you know, there's a very direct kind of framework to function on giving loan,

but if you know the framework, work around that. So it's like, okay, well, that's better than code. But the reality here is there's another value at this. Maybe even though the company is customized in the space, it allows you to actually be more capital efficient where you don't need the overhead. You don't need the people. It's a system that actually runs.

And also another thing that makes it very interesting is that it's tough to control or manipulate. This code, when it's built, often there are keys that show you to like to add more code to the system. Well, what people often do in decentralized finance is they burn the keys, but a criteria to add information into the system to make it go better. What that means is that there's no centralized authority. Because there's no centralized authority, there's no one to collect the overhead.

And because there's no overhead or any kind of cost on that end, it's just a one-to-one ratio, like I said in the beginning. And that's decentralized finance as a full, you know, bank lending. Rather than going to bank to receive the assets, people fry capital on one end and someone lends money here. It takes a lend and they provide API. And because of that, not low cost, you can actually get higher returns compared to traditional financial markets. Yeah.

And, you know, isn't it, you know, the other part that I think is interesting about that is the opportunities that it presents both on, and just taking the lending, just that is one kind of microcosm of this, of decentralized finance. it opens up the market for microlending. It opened up lending to people who may otherwise have been, you know, unable to hit certain triggers. And it provides maybe someone like me who doesn't, you know, I'm never going to go, going to have enough money to create a traditional lending facility.

I could actually put some of my assets into a pool that is then lent out to, you know, I could pick a risk tolerance and then be part of a lending pool. and now I'm able to capitalize on a capital that would have just been sitting in a bank account otherwise. And that to me, I hate, you know, again, I don't want to use too many buzz terms, but like the democratization of that in its untarnished form is incredibly interesting to me. I mean, it just to me, it's hard for me. So I'm like way down the rabbit hole, not as much as you, but without owning a defiance or crypto business. I'm, you know, this is like my, I just think it's so interesting. I can't see how once

you start down this path, how at some point in handicapping the timetable to me feels kind of impossible, but I can't see how we, this isn't the eventual where we go. Sure. Oh, absolutely. Um, you know, the question is, is it going to be like the future for everyone? Or is it just like fintech is going to take over a portion of market, makes things easier of access, but find its niche within how things actually work. And that's the real question, you know, what it's going to be, what's going to like the biggest the most coolest thing about defy as you dive in is it's kind of like the weird marriage of traditional finance nerds like you and me with developers and code knowledge and it's kind of creating and creativity i think it's one of those kind of things where we can kind of go find these two

kind of concepts of autonomous code financial nerds creativity and i'm seeing a lot of people building a lot of unique concepts that aren't possible traditional finance or they're applying and really challenging the way how financial systems work and improving how there could be a better solution. Yeah. The reason why decentralized finance, I believe, is a future for sure, is it really allows people, let's say, let's start with third world countries. I think in first a whole countries is great. There's a lot of corruption in banking models and in currency. I remember a story where Turkey's currency raised and the inflation raised by 40% decreasing the value and dramatically in the value of your assets. Could you imagine having 100,000 the bank,

now it's worth 60,000 a day later of nowhere? It's incredibly disruptive. You know, one of the few aspects. This isn't necessarily needed to DeFi, but it's very much used in the D5 system, is stable coins, where it's one coin with a derivative value that's stake to another value, constantly they can't move. You know, and Nigeria is one of the largest users of Bitcoin, even more than USA. And these stable coins, what they are is it allows people to actually keep stable value in their funds to be able to transfer it natural. And another problem is because, you know, if you want to exchange your assets, you are often stuck in the area you are, or whatever other future in.

With the internet, these stable coins, you can know access digital easily for Nigeria, say in Thailand or the USA, naturally creating more global market and actually increasing maximum market share, allowing variable countries move up way faster and allowing us as like in person to actually have more access to new opportunities in there. Yeah. It's really amazing. I, well, so my mind, I love this conference.

This is going to be one of my favorite. So my first thought is imagine if the ruler of your kingdom could just drop like, let's say $1.9 trillion on the ecosystem in a snap of his fingers and tell you it's because of a disease and then do another six just for why not. So, you know, this is like real world hitting everyone. Second, you know, I was one of the things, one of the cryptocurrencies that I follow quite closely is Cardano. And one of the things that initially caught my eye. And since reading into it, I know more of the nuances, but one of the initial stories that caught my eye about Cardano, was how Charles Hoskinson, the founder of Cardano, was using, was working towards applying it to the African continent,

which if you don't necessarily understand what goes on there as a listener, you know, all the, if there's a currency, and if that currency is controlled by whatever the country is, it is often highly centralized and it's all grouped into whoever like the few controlling entities are. and the rest of the country is left. They're still trading like sticks and shit. And what's happening and what Cardano is one of its early missions was to be able to do, just like you said, provide a base layer of transactability to people, boots on the ground, you know, I can actually pay you for the milk that I need and you can pay me for the bread.

And like being able to now give a stable currency to all these people. So, okay, so that's the cool part. What really is going to be fun is when we can blockchain HTTP protocols, like web protocols, because right now they can still use the internet to kind of create geographical barriers to crypto. And it's like as soon as we can figure out, and I know there's some projects that are working on it, but like as soon as you bring down that layer and you put the actual internet onto a blockchain that is not able to be centralized or have these, you know, these

artificial barriers to it. Holy shit. I mean, that's like a whole other level. I think a great example of that is there was recently subpoena on uniswap. So Uniswap is a decentralized exchange where people can post tokens and trade. It's like a, it's a broker that runs totally automatically, which is amazing. And we do have, it's called, you know, Cardinals are going to do it. Ethereum has done it. Algorithms looking to do it. Polygons builds on Ethereum. It's like a decentralized internet where no one can control and, you know, whatever can build on. And that's where people are building on these protocols.

You know, it's worth building on it. And what we kind of saw is the power of like building on a non-controllable system. Let's say, you can control how the output. You can control the input within the ecosystem. And I can go into that as well, my regulation if you want to. But Uniswap built a whole entire system on the Ethereum network on decentralized code. It's open source publicly available to anyone.

They basically got a subpoena saying you're basically watching securities, the unregulated securities. and then anyone have access to them. Well, the problem was the government couldn't shut down Uniswap. They built this code on this ecosystem that just can't get shut down. It's naturally there. And it's running on all this autonomous code. They burn the keys to running the system.

So all Uniswop had access to was an HTTP-P-P front layer landing page to enter the app. And all that had to happen, somebody did make a new website, another country, copy that, pop it, and place it there, and it's running again. You can't actually stop the system. So let's say, real quick, before you go any further, because I think this is an important thing to clear up for people, when you say like it's running on a deep, like I would love for you to explain how it works, like the distributed network works, how they can't take it down, right? Because I think for people who are listening to this and maybe still not familiar with a lot of this stuff, that doesn't make sense. You just pull the plug or delete the server, right? Like how is it that that can't happen?

So I'm not the foremost expert on say blockchain as a base layer. But you're better than probably 95% of people listening. So we're right ahead. Kind of what Ethereum is. So I think there is kind of like some major asset classes that are competing. You know, I think Bitcoin's in a world of its own where it's trying to compete itself with a score of value. But the rest are trying to take over market ecosystem.

So it's Cardana, Algarand, Ethereum and Polygon, which is based on Ethereum and a lot of a lot of Salina Avalanche can go on. Yeah, yeah. And kind of what these guys do is they built a code or a system, basically, where there's a ability, it's called a blockchain, where all the information of the system is all information they would have access to. And basically how it grows is rather than people have manually like one group or one central agency has to grow a system out.

Like the internet is people who wants to go and build website and system or expand it, whether it's kind of a layer. Kind of what happens to build a layer that's its natural. value or customizable and people go in and implement and grow it naturally. And you have to often have access. Now originally you like say well, all this is you have to have access to like a native token to implement and then use it. But a lot of these you actually have to look for where it's this an autonomous system that runs where a framework is given and that framework is code.

We have JavaScript, Python, and a theory and solidity. I don't remember what Cardenas is off telling me that. But it's like in a code and you say this code and you can enter anything in here and because no one is on charge of that layer, you know, it's like no one can shut it down. So if you, I can put a code or do anything, I can plug it there. No one can just, like, go up and say that code to valor, pull it out. And if I did that on the internet, I have a website attached to me. I have, I have a domain. I have like a license. I have always different thing. They can know where the code is attaching the code and wipe the code out and go to some kind of centralized group to destroy it. If I build my domain on Google and build that out,

they can go to Google and say this guy by with this, this grid. With Ethereum, there's no way to really actually, and there is, okay, I can go into it, but on the initial letter, you don't know what it is. It's no like K-Y-C necessarily. Now, there is, and I can go into that later. But on the system itself, you can't just go perform

and figure out who someone is. And because of that, anyone can place anything, and you can't just pull it off. And because you can't just pull it off, what that means is, like, anyone can close anything or do anything in the system network internally, and no one can stop them. Unlike the internet where anyone can pull it off.

Now you can control and figure out where people are and it's called off ramps, but I can go into that and that's where you start really figuring. And there's also ether scan, metamath transactions. I can go into actually how it's very easy to figure out whoever everyone is,

but it's also at the same time kind of complex. But yeah. Yeah. And the reason you can't just pull it off is because you have 20,000, 100,000 different computers that at all times are. And the computers are anyone who holds a token

and you have to get everyone who was a token to be like take that off and it's almost impossible. And that's actually the great point I forgot to add. And that's actually perfect conclusion is the people, how you can pull anything off is you have to get a large, they have that data token that you have to have in the system like I said, where there's ADA for Cardano, Ethereum or Ether. And basically you have to get a majority of people that want to agree to pull something or implement something new into that system. Yeah.

And it has to be a universal agreement. The group that does this best, I would say, is to Bitcoin community, where it's taproot, where it comes to that, it's almost impossible to change. Yeah. They just recently implemented this new system called Tapper. From what I understand, you know, in Bitcoin, it's very actually hard to use as anything other than the golden rock, I would say. But what did they try to do is they're allowing transactions.

They build this thing called Tapper. I still have never actually set down and read, like really going to the nature of what Tapper is, which came out of it. like months ago. I really should have. But basically they had like a 60% consensus by everyone who's involved with Bitcoin community somehow to agree to influence. And getting these Bitcoin guys can find anything as possible. Yeah. So they agree to it. And basically it has transactions to flow more freely within the thing they're trying to build called a Lightning Network. Yeah. That is something that really goes on top of Bitcoin that's supposed to compete with

the Ethereum concept of Radon and on your end and what these guys are opening as well, where you can actually build on the Bitcoin network and put transactions through on Bitcoin. And that was one of the great examples of like, it's the first change, I think in like eight years or something crazy like that. And the thing was built in like 2008. It tells you like how impossible it doesn't change anything. It's just going to get harder and harder as this big one gets us here with more people.

Yeah. You know, the thing that, you know, they call it, they call it FUD for anyone's listening. And it's basically just trash talking and, and nonsensical stories.

There's a lot of gasoline that goes on. And, you know, when I, again, I, I'm probably way too, down deep into this rabbit hole for my own good, considering my limited technical knowledge.

But, you know, again, the more I research the technologies, the more I understand things like, like Salana coming out with proof of history, right? So you have proof of work, proof of stake. And now here's another network that has something called proof of history, which is able to even take proof of proof of stake, which I won't get into all the different details, even take it a step further and all we're just continually moving to the idea that in order for something to change the group you know the whole group or or a massive portion of the group has to agree to it and each one of these evolutions makes it harder and harder to rig that change in any way that isn't an agreed upon part of the network as it was set up so like there's a set of rules

for that network. And you can operate inside those rules as much as you want. And what all these iterations and new attempts of doing is just solidifying the security of that network so that you can't have someone come in and just all of a sudden debit themselves a million dollars for no reason. And wait a minute, that's not how the system works. And 73% of the people in the network say that it's not. So too bad, so sad.

And that to me, I look at that. And now I kind of want to, I want to transition a little bit. And we can go down these rabbit holes again as much more. But I want to transition that a little bit to insurance because, you know, you think about how, I mean, that freaking way that insurance. I have a hard time because I live in traditional property casualty insurance world. And to run a traditional property casualty insurance business, you have to operate by those set of rules.

And then you see the things that are happening in finance and you're like, oh my God. Like look at what they're doing. data is passed and how it's held and how how easy it is to spread risk. And this is what we're doing in insurance yet, you know, we're still using AL3 download systems in order to transfer inaccurate and oftentimes antiquated data bytes between, you know, I mean, like I just look at it. And I'm like, this is insane that this is how we operate. I know that's not, you're not operating in that same space. Like you're, you're doing something slightly different. But it just, this. to me, if there isn't, like right now, every major property casualty insurer in the country

should be finding people who think the way you do, who have your type of expertise and putting them on staff. And even if they're not doing anything, they should be researching and testing and talking to people and starting to build these networks. What's up, guys? Sorry to take you away from the episode, but as you know, we do not run ads on this show. In exchange for that, I need your help. If you're loving this episode, if you enjoy this podcast, whether you're watching on YouTube or you're listening on your favorite podcast platform, I would love for you to subscribe, share, comment if you're on YouTube, leave a rating review if you're on Spotify or Apple iTunes,

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You've got to have, if you want to disrupt insurance and implement a lot of these new concepts, you have to understand insurance. And you also have to understand the space, and you have to combine it. It really is. You can't have one of the other. Like, you know, what I built, you know, started originally as, you know, we had a parametric framework, Peremetric Insurance Framework built under a captive insurance model. And then I'd like implement the idea of the insurance and security, which is a brand new concept,

you know, and in cat insurance and CDO's credit falseball models are like the whole thing. It's like you have to, you're not, you're paying these guys to think, give them a problem. And you tell them to solve this. And if they do their job, they're passionate. If you get a great person, they'll create some crazy solutions. You're like, oh my God. You know, and that's kind of like why you hire these guys. Yeah.

It's like there's a strategist. You can think 10 years ahead of. what does the industry look like and actually bring your company forward. Yeah. So let's talk about steady state. Oh, man. What's going on? What is it, you know, give us the lowdown?

Steady state. We are so under these layers, let's call Ethereum. Cardon is not there yet. They're heading there. And Solana is heading there as well. And Avalanche started. There are these things people build these decentralized code businesses on top of these networks. And what we simply are, they're providing insurance to these businesses for different kinds of risks, specifically catastrophic risks.

Now, catastrophic risks like we actually normally understand them are hurricanes, lightning storms, earthquakes, but there's a new kind of catastrophe risk we understand to be a cat event, such as technological risk or cybersecurity risk. We forget those are catastrophe events. The biggest risk right on this industry is the code is still early. industry is still early and it's like the wild less. You remember we have the internet. You probably, you Brian and I were like on the cusp of that and we're young, but like people with like fishing attacks and viruses and scandals. This is where we're at right now in this space.

It's a wild west, you know, so if you're not carefully, you get serious trouble, you know. And what we're doing is basically the risk you're exposed to is if you build this decentralized code, if there's a bug in the code, someone can take advantage of that, say, steal the money. Okay. Or if there's a, you can blackhead exploit. And like if the coders themselves make a mistake on like some kind of a poor decision on like the infrastructure, you can blackhead exploit that.

And people who provide capital to build these networks and systems are totally exposed. Okay. And these kind of events we're trying to start and start to ensure for protocols. How the industry currently works is there is no insurance for protocols. And it's a hundred and forty five billion dollar industry just on Ethereum. And it's probably heading to a trillion dollars, probably a year or two. I wouldn't be surprised because a year and a half ago is like $10 billion, maybe less. So it gives you an idea of how quickly it's a scaling and growing.

And there's no sign of stopping. And so basically what we're doing is we're starting to show you protocols for catastrophe at risk. And currently how the industry works right now is I'm a retailer. If I want to get in, there's no insurance for protocols and the retailers have to get insurance. And I can use like 50 protocols, okay? I can use like 50 business models. In this new industry, you can work in like 50 businesses rather being attached to one.

I'm involved with 50-60 protocols and running capital, actually using them growing my, my, I guess my stake in all of them. And basically, if anything get hacked, rather than the business being responsible for writing the code or the people in charge of that area, I lose the money. And if I want to get insured for that, I have to go to mutual systems. How it works in these mutual systems is incredibly fundamental to law, where people like you and me, Ryan, say provide capital into a pool to insure. people. And I get insurance in that pool. So I want $100 insurance. Okay, now let's say one of the

users, okay, viewers wants $100 insurance and you and me provide $50. If this is the weak refund of criteria to pay him out, if the event happens, we have to vote where I am or whether or not we pay him our money. It's kind of an odd system, the mutual model, and there's no regulation to provide without me if we want to pay out. And the current model right now is the current model the approval rate for a payout is 18%. No one's going to trust that model of insurance. And so businesses aren't trusting that either.

What we're doing is all these events that we're trying to cover forward have historical others and what kind of loss you're expecting. And the events you want to look at can be track on on-chain public data. So we've actually just partnered one of the biggest players in the game, Chainlink. We're integrating, sorry, we're integrating with Chainlink

and we're working very closely with them. And basically, they have this concept public keepers. network. What it does is it tracks all this on chain data that's going on constantly all these different protocols and when it finds whatever it needs, it'll actually bring the data to a smart contract you're looking for. And then from here, we have this network now from the tech events almost automatic what's going on. We're using parametric insurance for protocols where you agree to the value payout created the event and we agree to establish criteria. The Keepers

network goes out for those criteria and when it finds the event, it brings it in and starts bringing a payout for planes process that's almost completely automated to the protocol. So, humans intervening and voting on a decision is run by technology. And humans evaluate the technology and make sure it's correct. Now the other problem we have with insurance, this is kind of the, yeah, auto insurance is invader very cool. How actually, but what the problem we have also is we are not like a $500 billion dollar insurance fund.

How do you provide business insurance? And that's the other key problem with state states. How do we actually provide capital to ensure these protocols? Well, the parametric model, how we're kind of building it out initially, is you know, you have a predefined level value of payout pre to the event. Often it's the average loss. You need about 23% of the actual protocol size, value, to the fully cover 90% of tax on the protocol as we've already calculated.

And so basically, about 20, 30%, they say they post with it. Rather than you, I can insure them as a business initially because they don't have the capital. People can stay capital. Say you have AVEA. AVE is a lending program on V, Citi, twice, minus, on the Ethereum network. Avey is willing to pay a 20% rate of return. and their own native token, let's say, if I'm up to that $30 million policy,

let's just say something crazy like that. So if I as a user take 100 U.S. DC to cover their downside, I can receive a 20% rate return an offer. So buying the risk, basically, buying the risk of a business, they're paying me in business stock, which is a whole unique aspect to it. But the problem here now with this, Brian,

is my upside is 20% in moving value, which is great, actually, in my opinion, but your downside is 100% on a U.S. value loss. Because it's parametric. The payout happens, it's going to pay out. And so what we're doing rather is actually rather than trying to like argue like what are the odds to pay so because we're doing that we buy a bond, you're betting on a structure debt. You're deciding your loss and betting on a chance of what

happening. We're trying to control your loss. We're buying from CEO credit the false law models to believe things called index pools. It's just a derivative pool with weighted exposure to multiple different insurance pools on the coverage side. So if I have a pool, say, with 5% exposure to 20 protocols, okay, and the premiums here are really hot, by the way, the APYs are here are stupid high. And with the blue chip, the Aves, the compounds, the ones that are really long-term, the Googles in the apples of the future,

they're really good wise on accumulation are very well. And so basically, we're really in derivative pools with like weighted exposure to multiple these different kind of parametric coverage pools, say 5% to 20 pools. If an event happens in any of these pools, rather than losing 100% of value, he was 5%. And say my upside is, say, 20% again, of 20 native tokens being accumulated naturally

during the duration period. Our long-term vision is to make this top 100 defy index cool, structured cool with 1% exposure. The odds of one protocol filed for insurance in the system is like 5% in a top 100, which is you're taking a 5% chance at a 1% loss. Two, you're taking a 2% chance at a 2% loss. Let's say Black Swan, five protocols filed

for insurance on this network. You're taking five chance. You're looking at 5% loss in your principal, but your upside is a 25% return, 20% and 100 token being paid out to you. You're accumulating. We're actually trying to turn insurance. It's one of the most natural accumulating products

you can buy while controlling your downside risk. This is going to be one of the best ways to accumulate blue chip tokens in D5 that are the future of the industries and while also controlling the downside. We're looking to take this structure product model going on the KIC compliant blockchings and actually looking to sell that

and bring institutional finance in. And our long-term goal is to take these fees, collect them naturally, and then build an insurance pool that floats over off all of it. So what you actually see is this is more of a reinsurance model than an insurance model who are building it out. But the goals to pick the fees, collect them, and then build an insurance pool that floats off.

When the insurance pool floats up, it'll actually keep the APY's high for the stakers while reducing it for the protocol. So essentially, if I were to, well, that was a lot, right? No, but it's awesome. I followed like 90% of it. So essentially what you're providing. if I were to put this back into analog terms is you're creating an insurance, an insurance company

in which the dollars that normally would be invested by the company and reaped by the company are invested into the products in which you are actually insuring and then the people who that you're actually getting to reap the investment dollars out of those, out of those entities in sorts, right? Kind of like that. Yeah. We can almost create insurance where business could buy their own risk and then profit. Again, I know, I know it's a lot for, for you guys listening to home who haven't done a lot of the research, maybe you don't understand all the terms.

And I'm certainly not going to ask you to stop and define them because go do the research. But I just, I can't, like, I come back to it. I'm like, I can't see how this isn't where we're going. Like, I can't see how, you know, how this isn't the path forward. Now, one of the things, one of the questions like, do you guys? Do you guys have a token? Like do you have consumer, consumer, could a consumer like me

buy steady state to start to get into these pools and start to be part of this process? Yeah, so we're going to have a release, we're releasing product in Q1, 2020. We're about 30% for our buildout, and we're going to be a test net probably November, December. You know, and so once we're all set, you know, we're planning to use our token with product

with utility value on Q1, 2020, to and basically, yeah, you can have our tokens. Whoever holds our tokens, one of the nice value is you're collecting the fees, a portion of the fees for the whole system, which is really nice. So it's natural like, you know, automatic paying, you know, a dividend, but also in the same time, you know, using these systems and these models and state pools, it's where we're almost building the first turning insurance into like in this space, build the first insurance in the space, but also like building the first bond market for the

structure products. Yeah, that's what I was going to say. it sounds like a hybrid insurance slash bond product. Yeah. And the long term rules to build an insurance pool that flows over the network. Okay. You know, we can offer 40% globalization to all the pools in our system.

What protocols can do is they have like an insured payout, let's say 50%. And then they have like a floating payout on the like a natural insurance pool in the floating rate that like receives that only promises say 10% of value. So then we're only receiving in the business 10% of premium, let's say on, on the 40 per million, which is actually 2% or whatever, but the people who state capital will still get their high APYs because you're paying the full and the collateralization. And so you can be full colonization on this people's taking capital, still receive those APIs, but us receive a lower one, which makes it more attractive for the business. What this will do long term is as we keep

floating, it'll create scarcity on the stake. And then people will start trying to buy and trade these on these index pools on a discount and premium value on a secondary market. similar to that system, you know, a fixed income system. But at the same time, it's insurance and longer term. We create our goal is to create a short-term, long-term, scale, a model to insure protocols, you know, and actually we're almost like building a model that prioritizes for insurance. Well, we move from reinsurance to actually insuring the protocols ourselves as we keep developing. And by us, I mean a decentralized community, not run by me, not run by anyone, you know, directly,

but by the people who actually want to be involved in the space. And when you have that token, that native token risk, you can be a part of that community and help develop it in the future. We're planning to build fintechs that work with DOWs, this new kind of concept where this Dow community, how often is a fintech, okay, and then that runs everything. Whereas this community, fintech has to fight to receive these tokens to get a stake in the business.

And then these fintech are going to take these products long term and want to go into KYC, KYT, through blockchains, and we want to take these products and sell them as new asset classes across a whole new industry, the traditional finance. Because honestly, these structured index, are a concept that you clearly understand on a financial model, but you get exposure to defy in a way that makes sense. Yeah.

Yeah. How did you get into this? Defi? Yeah, just do what you're doing right now. How did you get here? How do you get to this level where you're, you know, I mean, the sophisticated, you know, talking about derivatives of, you know, de-financed, you know, what is essentially a bond.

product. You know what I mean, we're talking about layers on layers that we're still seemingly years away from. But, you know, how do you get to this space? Like how do you, how do you get to this point as far back as you feel is relevant? I mean, I felt a lot of defy in the fall of 2019. One of my professors was, he ran a product called pool together. Pool together is a no lost lottery savings account where I put money to a savings account and I received like everyone, every week, everyone sees like some of the rewards of all the aggregated EPY. What they use was compound. Compound is a new lending protocol that pays interest by the second or by the hour,

which is in banking, you get it annually or semi-annery. How do they compete with by the second? And basically all those generated EPIs pay out a winner every week and they receive rewards. So it's like a savings account where your money is never, you never lose your money, but then you have a chance on top of that receiving like extra million dollars randomly one week, you know, and people do with that. It's crazy. And then from kind of what interesting is compound finance, where I saw the interest that paid by the second as a finance town. Like, how is it even possible? Doesn't Gemini run off compound finance? I think a lot of people use compound in Ava.

You know, they're very secure systems. They're very effective. And they're very, they're very up to like code standard in just normal in the industry. So they're very solid. So I think Gemini uses it. I bet a lot of people use it. Comp is a very good token. again, I think these are blue chips of the future, the new blue chips to the future. But yeah, so comp, it's like, I immediately looked like, I thought this was a scam. There's no way interest paid by a second, right? And then I found that, oh, crap, it's not a scam. What blew my mind and really brought me in the defy, you know, it really was another product

built called URN Finance. You're in finance, what it was originally, it has a lot of uses now. It's like an ultimate hedge fund for anyone to use, basically, I would say, on this decentralized node by anonymous people. But what it was kind of like really built out to be initially was basically a smart contract where I put my USDC or my stable coins in the smart contract, it would find the highest APY every second between ABE compound, synthetics, and other lending protocols and naturally move my money at all times between all these narrative systems and find the highest

APY possible at all these bankings. And my thought is like, if you put that on a bank, what would happen? Okay. If you put that to a bank, like, well, it would force these guys to think how the hell would we get these API wise up or how the heck we did these APIs up, you know? And my thought was like, let's apply this. And I'm like, this is the future. And so I started with how do I go to get put a little all these concepts together and build something. And eventually I met a very well-known figure in the space, named Tim Frost from Yield App. And Yield App contracted me to build an insurance solution for

them and how to ensure their portfolio for other G-Fi risk. Tim Ross is a very, very, very well-respected person in the industry and I was very blessed to know the guy he's a great mentor and uh basically they like my solution they thought it was like this is typical insurance like an alternative insurance but combined with the you find and combined with all like derivatives and like oh crap this makes sense actually and they're like let's go for it and then we ended up going that with our first client and our first partner and we're very excited to work work alongside each other to be uh yeah the future of insurance that's awesome man that's that's very cool i uh you know this this would be if I, if I, I mean, you're what, like 25?

You're 24. Fuck you. I wasn't like, if I wasn't, wasn't like, if I wasn't 40 and deeply invested in the standard insurance space, this is absolutely where I would be. I think, I think this world that you are playing in is just so intriguing on so many levels and the, the, you know, the, you know, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the. the, you know, redistribution of wealth

in a non-communist standpoint, right? In a very capitalistic, opportunistic standpoint. I mean, I see this. It's incredible. I think in cryptocurrency, universal basic income is for the first time was actually ever possible. Yeah. In a way that actually can actually feasibly work

where people can all have a standard of life without sacrificing individual liberties. And I have found that very attracted. I am a big believer. trying to find the best ways to create global equity. I think if you sell poverty and wealth, a lot of different kind of wealth disparities, I think you saw a lot of problems in the world.

I think it's true proves that. And crypto for me is that solution. Where in one sense, you and I no longer have to attach to one business, whether it's, you know, Goldman Sachs or Liberty Mutual or Walmart, let's say. You can now work in whatever industry you want and get paid and work in an industry you want,

but also, you know, you're paid for the value you produce. there isn't and the money like this is these are money legos so like say i get i work with this one network okay this one protocol and then i use all working always in the protocols all my tokens get is doing this other protocol and it gets naturally grown and then i get like the protocol that serves me income and then the rest gets growing to a growth account grows like say 20% annually which is not crazy in this space and then like and then like that 20% the growth amount that moves into the growth accounts it's like this new space is if you're willing to be creative you can just disrupt everything. And I still really encourage you, Ryan, to look into it and really do

just think either ways I contribute to be involved. Because there is so what this was basically is, all these concepts we do in finance, whether it's insurance, PMC, title, health, life, alternative parametric, all these different concepts are going to be put into a decentralized sphere one point. If you know these concepts, willing to be a little bit creative, you can build a billion dollar unicorns because there's already a billion dollar industry in the space. It's It's not crazy. And I think it's, I think it's going to get shit crazier, you know, as we keep progressing. Yeah.

I mean, to me, the, you know, I just, I see. I don't have my head wrapped around it, but, you know, completely. But the property casualty space, particularly in, let's say, personal lines, auto, home, things like that. The idea of starting to decentralize those risks, starting to categorize them, and better understand what they are. And the other thing, too, is, and this is the part that's interesting to me is like,

is like, why I, what I don't, what I find, the concept that I was towing with, and you could even tell me if this is bananas, right? I'm the word, we're, this is just what I was thinking about. I was listening to some podcast, and they were talking about different concepts. And I'm always thinking about what is, what is blockchain? And I, you know, not that term,

but what we're talking about is decentralized, autonomous code. What is what can this do for property casual? And I started to think to myself, what, you know, rating is such a problem. And often at times it's because there, let's take, let's take a, uh, a less standard account like a, like a roofer, right? Let's take a roof. Tougher to place, limited markets, the roofer is forced to go through multiple hoops, oftentimes paying a drastic premium because of the risk that they have. Well, what if that risk was, was able at the base layer, not at the reinsurance layer for the huge players, but at the base layer, at the small business level, you could spread that risk out over

five or six carriers or as many carriers as we're willing to take a layer on that business. How much more competitive could the pricing be? How much more reasonable could it be? How much faster could it be delivered if one of those carriers didn't have to take the entire chunk, which today would be impossible based on current systems. but in a decentralized manner, you could easily chop up those risks or just buy into carries could buy into a roofer pool that'll and run off basically the same concepts that you're talking about right now.

Yeah. You know, there's an enormous opportunity there because now I don't have to be scared. You're talking about cat events, right? I don't have to be scared about one of your guys rolling off a roof, breaking his neck and dining and having that destroy my year because that risk is actually. are going to be distributed over five or seven different companies at the base layer, at the primary layer versus, you know, the only time you get into any kind of distributed risk in this capacity is when you get into the, you know, you're into umbrella layers that are, you know,

tens of millions deep. You start to chop it up. But, you know, the full risk of a million dollar death is taken on by the comp carrier on a roofing account. And I just, you know, to me, you know, this is one idea, you know, one thing that I was thinking about, like, how does this space start to just get, how does the decentralized finance and, and blockchain and all that kind of stuff? How does that start to impact the property casualty world? And just the idea of being able to buy into pools of risk, maybe as an agency, I want to, I want to go be the roofing guy. And I'd buy into the roofing pool because now I'm actually incentivized to write people. into that pool because I'm staking my, you know, what I've bought into in that roofing pool. So now, I mean, there's just all kinds of concepts there where you can start to distribute the risk less than the burden of any one major disaster. And hopefully the idea would be is quicker placement processing, distribution of information and ultimately a diversified catastrophic loss. Once we separate the concepts of stock and tokens of security, you know, and really start

separating that and tokens give them a new value out, I think everything you said is just absolutely possible. Our concept connects with tokenization. There's a guy built guy I just recently met. Not going to just close this game, but he's talking with Draft King's GameStop. I'm going to be kept with a bar stool where they're building tokenized Dow systems within these kind of ecosystem using loyalty rewards. I'm thinking like what you're saying. Combine these things. tools, which I want to get invested in new systems, make sure they're giving their job, right? Get enforcing their tokens, get an infrastructure and actually evaluate them. It's totally crap.

You, they're incentivized to make sure that this is 20-2 as possible. Yeah. I think you're seeing it, Ryan, what it's going to look like. And it's going to get crazy. You know, I love that when I hear stories about kids, like 10, 14 to understand this. Like, I met a kid who made 400,000 on NFTs last month. He's 14. I'm like, wow, like, you know they get it.

It's like, we're just catching up with Brian. you know yeah it's crazy another industry yeah i'll say real quick that demands disruption i think you can meet and look at is title insurance um why do we have title insurance if they're a blockchain and you can like associate an id to every person i think that is um one of the most easiest industries and insurance and pmc or real estate to disrupt is title uh i think one of the easiest use cases is what what's the point to say you own something you can literally attach an I did that on a public layer. Yeah.

Exactly. I think what you're saying, all these things, you can just start seeing it. Yeah. Wow. It's, yeah,

I mean, where my mind goes with this is like, it takes someone having balls like you do to do these things because, you know, they've never been done before, right? We're talking about concepts that are literally being generated.

I mean, obviously there's a, there's, there's, there's tangible things. that come out of them. But you're generating ideas that didn't that didn't exist and concepts that didn't exist and the way to, you know, maneuver around, you know, I just think there's so many barriers, all the barriers that are keeping what we're describing from happening are up here.

And it's, and it's having the storytellers, it's having the use cases. It's, it's, it's podcasts like this where 90% of the people that are going to listen to this, man, they are only going to understand 25% of what we said. But, and that's more. Researching. Yeah, but, but that's good, right? We need to expose more people to these concepts because, you know, like, you know, I look at some of the things that happen in insurance and people call them disruptors.

And I'm just like, that's bananas. That's not a disruption. A disruption is when, you know, the idea of what it takes. I mean, if I, I mean, you probably know, but if I were described to you what it takes to purchase an insurance policy today, just, all the steps, all the different things that have to happen to get an insurance policy, you would, you would shit yourself. You'd be like, that can't be 2021 what we're still doing today to get insurance when it's like,

you know, you can, there's just a whole better method. It's just going to take time for it to leak down to the lay. And when we start as adoption continues, it's why I just, I hope things like Bitcoin and Ethereum and Cardano and some of the networks that you talked about, I hope people continue to build on them. And what I really hope is we don't get the over the pendulum swing overregulation into this space that that hinders what's actually happening. Because to me, it's one of the most exciting things. You know, it's the most exciting technology that we've seen since the early 90s with the internet.

I mean, it's certainly it is. This is the new internet. When people tell you, anyone that tells you that like this is in the future, blockchain, BFI, NMTZ. or it's like people telling you telecommunications internet was not going to destroy telecommunications you know this is the next step it's it's we have like for people that told me that i'm like you have history to prove it's like it's like we we you were wrong here telecommunity care for the internet something you're right now like you're not okay let's stop them skeptical and really explore why and ask a question like you're saying open the minds and ask why yeah personally i think that it's even bigger

jumped in that and this is kind of how we'll close but I uh I see it more like the Manhattan project than I do the internet like you know what I mean to me this is that that generational jump that you know when we went from nuclear power not existing no one he could even imagine it to what we got after the Manhattan project I look at what's happening is that right now like this is this is that big a leap in my opinion it it just it is that powerful if things are happening. Granted, we're like, we're like this, we're like in the coin flip of the baseball game.

Like we're not even in the first inning yet, like of what's possible. But that being said, I'm excited, man. I'm excited that we had a chance to meet. I'm going to be following along with what you're doing. I'll be buying some tokens as soon as you get those out. You know, you want to sneak me some on the side.

I'm cool with that. You can be like, hey, Ryan's a cool guy. No, it's probably against like every regulation that exists. But I'm not against that if you're in time. But no. dude, I'm just, I appreciate you taking the time. I'm really glad that Jeff introduced us and hopefully we'll have a chance to connect again in the future.

Great to be here, Ryan. Thanks, guys. Yeah. Close twice as many deals by this time next week. Sound impossible, it's not. With the one call closed system, you'll stop chasing leads and start closing deals. In one call.

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