Etherisc Dip Token InsurTech Smart Contracts & Advancing Agriculture to Reduce Poverty

Updated: Oct 23, 2020



Advancing Agriculture to Reduce Poverty


Around 80% percent of the world’s poor live in rural areas, and many depend on farming for their livelihood. According to the World Bank, "Productivity growth in agriculture has the largest impact of any sector on poverty reduction — roughly twice that of manufacturing". Rising levels of productivity in China and other countries of East Asia has led to lower levels of poverty, but has been too low to have similar impacts in Africa and in South Asia, where the largest remaining pockets of extreme poverty are to be found. Despite increases in world agricultural productivity over the last few decades, global undernourishment remains significant and is on the rise, reaching 821 million people in 2017. Agriculture productivity is lower and is growing more slowly in poor countries, impeding their income convergence to advanced economies (World Bank).


In a recent World Bank study, Harvesting Prosperity: Technology and Productivity Growth in Agriculture argues that there are large potential gains to be made in productivity, and hence income. Growth in the agriculture sector is two to four times more effective in raising incomes among the poorest compared to other sectors. Agriculture is also crucial to economic growth: in 2018, it accounted for 4 percent of global gross domestic product (GDP) and in some developing countries, it can account for more than 25% of GDP.


Business Use Case - Contract Farming & Insurance


At the University of Georgetown we studied the business side of an insurance company that was evaluating whether to provide weather insurance as protection for farmers. The insurance product was for weather protection, to cover the farmers in an unfortunate season or weather event.


The Main Challenges Insurance Providers Face With Policies for Rural Farms

  • Economic viability of the business model

  • Lack of understanding from farmers on how the policy operates

  • Convincing farmers that the insurance is beneficial

  • Consequences farmers face if crop fails

Farmers that fell upon a poor season, were often not able to continue working & feeding their families, which could sometimes lead to horrible consequences and even death from starvation.


The consequences of going through repeated bad seasons are terrible, but the insurance policies were often still not purchased.


Why Rural Farmers Don't Purchase Insurance

  • Complexity - most small firms do not have the knowledge, capacity, or access to legal resources to take advantage of these provisions.

  • Accessibility - to insurance products, financing, buyers, other market participants

  • Demonstrating past experience and skills


Blockchain - Insurance Smart Contracts


Blockchain Smart Contracts simplify the insurance business model - decreasing the barrier to entry through utilizing a technical algorithm that will payout depending on what was guaranteed through business logic.


AON, an insurance firm with over 50,000 employees, partnered with Etherisc to provide Sri Lanka micro farmers access to protection products with a smart-contracts. Legal barriers, regulation, and all of the many issues with dealing with the government associations, local market characteristics, would decrease costs through a direct sales channel.


The economic profitability of the business model still needs further testing, but a first mover advantage is of critical importance in a fast moving disruptive market. Etherisc has consistently continued to build products, advance their cause, and maintain consistency since 2017.


Pricing and Valuation


Etherisc (Dip) token has recently grown, even while the market decreased over the past few months. A main impediment are the exchanges and accessibility to purchase. Uniswap is the main platform that gives it global access to purchase. Apart from Uniswap, Idex also lists the token per Coin Guecko. New exchange listings outside of Uniswap would lead to a potential massive gain increase. Part of the difficulty with being placed on other exchanges is that they deal with legal constraints due to the nature of the highly regulated insurance markets and international laws.


At an estimated market cap around 20 million - Etherisc is a firm to watch for 2020 - 2021. Depending on which exchanges they list on going forward, the valuation could see itself in the 200 M to 250 M range. Nexus Mutual - a recently launched token this summer, has a market cap of over 200 million - already ranked #65 by Market Cap.


Partnerships


Partnerships could be a substantial way forward for Etherisc to impact economic development. Partnering with global organizations such as the IMF, World Bank, or other corporate entities besides AON - could pave a strong path forward to helping solidify the economical feasibility of providing these insurance contracts to developing regions.


Products -


Hurricane Protection

Designed for low-income individuals and small business owners. Instant payouts are triggered by wind speed registered by weather-stations within 30 mile radius from insured’s permanent location.


Crypto Wallet Insurance

Protection against risk of theft and attacks of hackers on wallet smart contracts. Target coverage - up to $1M.


Flight Delay Insurance

First decentralized insurance. Payouts are automatic and almost instant. Now fully licensed.


Crop Insurance

Select your crop and the location of your field. Automated payouts are triggered by drought or flood events reported by government agencies.


Social Insurance

Affordable, accessible protection against risk of death or heavy illness of a community member. Immediate emergency payment which helps to get through critical times.


Collateral Protection for Crypto-backed Loans

Policy pays up to 100% of the issued loan amount if value of collateral provided by the borrower (i.e. ETH, or tokenized car) drops by 90% or more.





Sources


https://www.coindesk.com/business-is-booming-for-defi-insurer-nexus-mutual-ahead-of-ethereum-2-0


https://www.insurancejournal.com/news/international/2019/07/01/531026.htm


Insurance for agricultural entities in developing nations is very tricky - Recently Etherisc partners with with AON in Sri Lanka.


https://ir.aon.com/about-aon/investor-relations/investor-news/news-release-details/2019/Aon-Oxfam-and-Etherisc-launch-first-blockchain-based-agricultural-insurance-policies-for-smallholder-farmers-in-Sri-Lanka/default.aspx


https://etherisc.com/


https://www.insurancejournal.com/news/international/2019/07/01/531026.htm


https://www.un.org/development/desa/dspd/wp-content/uploads/sites/22/2019/03/Rural-poverty-EGM_IFAD-overview.pdf


https://www.worldbank.org/en/topic/agriculture/overview


https://www.weforum.org/agenda/2019/10/agriculture-africa-asia-poverty-innovation/


https://www.pnas.org/content/117/1/259

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