Degis — Revolutionizing your on-chain and off-chain insurance needs | by Vespertine Capital

Jan 7

5 min read

Degis — Revolutionizing your on-chain and off-chain insurance needs

Source: Degis Website

Degis is the next generation all-in-one protection protocol. They are launching the first decentralized protection market on Avalanche and by the looks of it, they mean business. Their goal is to completely disrupt the traditional protection market by leveraging blockchain technology to solve two key problems inherent in traditional protection markets today — excessive operations cost and non-transparent claims.

As we all know, everything that resides on the blockchain is transparent, decentralized and immutable, which means that all of Degis’ processes are highly automated. There is no need to hire someone to sell, explain, verify or settle claims. Everything can be done automatically via smart contracts. For the end users, the claims process is just as straightforward. As long as claim conditions are met in the smart contracts, payouts will be automatically sent to the claimer’s account.

Degis has designed their product matrix which comprises four different forms of future protection that is anticipated to meet all insurance needs in the future:

1. Token Model

By using smart contracts to stake reserves, you can tokenize a certain protection event and use an AMM pool to make it circulate in the secondary market. At the expiry date, the smart contract will execute the protection policy automatically. A token price protection would be a good example of this.

2. NFT Model

Degis uses AI algorithms to predict the price of each protection and then sells it to the buyer as an NFT. Liquidity providers can stake their money in the protection pool to share the risk of compensation and enjoy the income of protection, while buyers can enjoy an automatic and transparent protection policy. A flight delay protection is an example of how this can be applied.

3. Meta Market

All existing protection protocols, NFTs, and tokens can be traded in the meta market which will serve as an aggregator of sorts. There is no restriction that only Degis products can be listed, all other on-chain protection products from other platforms are also welcome. By setting some variables, you can then easily generate your own protection, without needing to know how to write smart contracts.

4. DAO Model

Protocols form a protection DAO, where they take risks together. Should one protocol be hacked or attacked, a proportion of the total staked fund will be used to compensate for this loss. Decisions are also made collectively by all members.

Source: Degis Website

At launch, you will be able to access 2 products: Token Price Protection (Naughty Price) and Flight Delay Protection (Miserable Flight), which serve to protect you from on-chain risk and off-chain risk respectively.

For Token Price Protection, you’ll need to mint 1 protection token by staking $1 in the policy pool. Buyers and sellers can purchase or sell protection tokens freely in the swap pool. The holders of the protection token can get a payout should the corresponding event occur. For example, assuming the current price of AVAX is $100, and the protection trigger event is that AVAX price falls below $80 at the expiry date. If the price of AVAX does drop below $80 at the expiry date, then the protection token holder can use each protection token to claim $1 from the policy pool which is 100% collateralized.

Liquidity providers can provide liquidity to the swap pool (AMM pool), which means staking both USDT and the protection token in the swap pool. The transaction fee of the swap pool is 2%. When a buyer wants to use $100 to buy protection tokens, $2 will be given to the LP directly, and the remaining $98 will be used to swap protection tokens from the pool.

For Flight Delay Protection, the price will differ due to flight route, buying time, and sales volume, all of which will be calculated by the Degis AI algorithm. Each protection is sold as an NFT. If the flight is delayed, then the corresponding payout will be given to the protection holder automatically, as seen from the chart below.

Liquidity providers who deposit their money in the pool to improve the payout ability can be regarded as protection sellers. All protection sales revenue will be put into the protection pool. Liquidity providers can share 50% of the income as payback.

The $DEG token will serve as the currency that will fuel the Degis ecosystem, with 40% of the total supply reserved as purchase incentives for buyers and 15% reserved as rewards for liquidity providers. There will also be staking rewards for single-sided staking and LP staking. $DEG holders can also stake their $DEG to participate in the Lucky Box. After staking 10 $DEG, you can buy a ticket which will allow you to guess the number that will be drawn by the Chainlink oracle. If you manage to guess the last digit correctly, you will get an equal share of 20% of the total pool in the Lucky Box. Similarly, if you manage to guess the last 2, last 3 and all 4 digits correctly, you will get a corresponding share of 20% of the total pool. The remaining 20% is rolled over to the next draw.

Degis has carefully designed their product offerings and has just recently concluded phase 1 of their testnet. The mainnet will launch in Q1 2022, with the IDO and TGE also expected in the same quarter. If you are as excited as we are about how Degis can revolutionize the traditional protection markets and would like to be a part of this journey, stay close to their official channels listed below.