[VIDEO] Explanation of BitShares Insurance DAC

[wasthatawolf]

A big potential problem is share distribution and its effect on the claim pool.  Since ownership of shares in the DAC insurance policy is anonymous, how can I as a consumer trust that my risk exposure won't fluctuate wildly if someone who holds a significant portion of shares has a large but valid claim. 

For example, say the claim pool is around 5% of total, on average.  I buy shares expecting ~20x their BitUSD value in return if I need to make a claim.  Then someone holding 20% of the total shares makes a valid claim which is then added to the claim pool.  That 5% jumps to 25% and now if I need to file a claim then the maximum I can expect is ~4x the BitUSD value of the shares.

Insurance is all about mitigating risk and traditionally when you buy a policy you know what your premium is as well as the maximum claim amount so you can quantify your risk exposure for the asset that's insured.  With this Insurance DAC, while your premium is fixed, the maximum payout has the potential to fluctuate wildly which is counter intuitive to the entire purpose of buying insurance in the first place.

[phoenix]

I haven't quite understood the task of the risk adjuster as described in the video. If the adjuster pays out alot in a month how will this affect their trust rating? Surely in a 'bad' month or a hurricane season there may be good reasons for mass payouts. How will the volatility in payouts that therefore may result - for the same type of claim - be addressed? Is there a planned trust rating system for those taking out insurance?

My understanding is that the risk adjuster is responsible for validating claims, and the payout that is due. A good adjuster should be able to show that he is being honest, and so his prediction market should remain stable even if he has to make a lot of payouts.

[pgbit]

I haven't quite understood the task of the risk adjuster as described in the video. If the adjuster pays out alot in a month how will this affect their trust rating? Surely in a 'bad' month or a hurricane season there may be good reasons for mass payouts. How will the volatility in payouts that therefore may result - for the same type of claim - be addressed? Is there a planned trust rating system for those taking out insurance?

[fuzzy]

For those who think Bytemaster doesn't pay attention to your ideas...
https://bitsharestalk.org/index.php?topic=835.0

It seems sometimes he takes the community's ideas and substantially improves them...

<asskissing> Wonderful job so far </asskissing>

Post your ideas to the Alternative DACs Section here:  https://bitsharestalk.org/index.php?board=9.0

Keep it up!  We need as much of that kind of kissing as we can get!

lol...as you can see, I am liberal in both application of ass kissing and criticism so consider it well deserved. ;)

[Stan]

For those who think Bytemaster doesn't pay attention to your ideas...
https://bitsharestalk.org/index.php?topic=835.0

It seems sometimes he takes the community's ideas and substantially improves them...

<asskissing> Wonderful job so far </asskissing>

Post your ideas to the Alternative DACs Section here:  https://bitsharestalk.org/index.php?board=9.0

Keep it up!  We need as much of that kind of kissing as we can get!

[fuzzy]

Shareholders in the DAC make a profit from transaction fees.

How exactly does this happen without mining/forging?  Transactions as Proof of Stake seems like it is still going to pay out to individuals for running something on the client side.  Really trying to understand this part.

[fuzzy]

For those who think Bytemaster doesn't pay attention to your ideas...
https://bitsharestalk.org/index.php?topic=835.0

It seems sometimes he takes the community's ideas and substantially improves them...

<asskissing> Wonderful job so far </asskissing>

Post your ideas to the Alternative DACs Section here:  https://bitsharestalk.org/index.php?board=9.0

[bytemaster]

Shareholders in the DAC make a profit from transaction fees.

[luckybit]

I think waiting a month to start receiving payout is to long, perhaps it could be shorter if the adjuster has had a good reputation for a very long time? Also, how do the shareholders in the DAC make a profit?

I could give you a payout as a loan and then you give me a percentage of your payout a month later. The closer it is to your payout date the better my price would be for you, like a pay day loan.

[blackbeard]

I imagine the hardest part to implement  in a decentralized identity/reputation system is how to protect against sybil attacks. Whats to stop me from creating 1000 fake "accounts" and giving the target adjuster shitty reviews?

Anybody can advertise the adjuster in a positive or negative light anywhere, not just in the DAC's forum page. But in order to actually affect how much they can spend you have to actually affect the adjuster's prediction market.

Ah let me see if I understand what you mean. Let's say that I want to be an adjuster. I create a coin called "bitBeard" to represent my adjusting firm. As people trust me they will purchase more shares in bitBeard which will drive my price up. If I'm on the right track this logic seems to say that my prediction market will go up if I can turn turn a profit. Turning a profit doesn't mean that I'm honest

But if you turn away to many claims, then people will start to complain about you, and your prediction market will fall, while your competitors rise.

Prediction markets ebb and flow regardless of the asset being traded. Look at bitcoin, price dropped but it was because of mtGoX, not because of bitcoin itself

[phoenix]

I imagine the hardest part to implement  in a decentralized identity/reputation system is how to protect against sybil attacks. Whats to stop me from creating 1000 fake "accounts" and giving the target adjuster shitty reviews?

Anybody can advertise the adjuster in a positive or negative light anywhere, not just in the DAC's forum page. But in order to actually affect how much they can spend you have to actually affect the adjuster's prediction market.

Ah let me see if I understand what you mean. Let's say that I want to be an adjuster. I create a coin called "bitBeard" to represent my adjusting firm. As people trust me they will purchase more shares in bitBeard which will drive my price up. If I'm on the right track this logic seems to say that my prediction market will go up if I can turn turn a profit. Turning a profit doesn't mean that I'm honest

But if you turn away to many claims, then people will start to complain about you, and your prediction market will fall, while your competitors rise.

[blackbeard]

I imagine the hardest part to implement  in a decentralized identity/reputation system is how to protect against sybil attacks. Whats to stop me from creating 1000 fake "accounts" and giving the target adjuster shitty reviews?

Anybody can advertise the adjuster in a positive or negative light anywhere, not just in the DAC's forum page. But in order to actually affect how much they can spend you have to actually affect the adjuster's prediction market.

Ah let me see if I understand what you mean. Let's say that I want to be an adjuster. I create a coin called "bitBeard" to represent my adjusting firm. As people trust me they will purchase more shares in bitBeard which will drive my price up. If I'm on the right track this logic seems to say that my prediction market will go up if I can turn turn a profit. Turning a profit doesn't mean that I'm honest

[phoenix]

I imagine the hardest part to implement  in a decentralized identity/reputation system is how to protect against sybil attacks. Whats to stop me from creating 1000 fake "accounts" and giving the target adjuster shitty reviews?

Anybody can advertise the adjuster in a positive or negative light anywhere, not just in the DAC's forum page. But in order to actually affect how much they can spend you have to actually affect the adjuster's prediction market.

[phoenix]

I think waiting a month to start receiving payout is to long, perhaps it could be shorter if the adjuster has had a good reputation for a very long time? Also, how do the shareholders in the DAC make a profit?

[biophil]

I imagine the hardest part to implement  in a decentralized identity/reputation system is how to protect against sybil attacks. Whats to stop me from creating 1000 fake "accounts" and giving the target adjuster shitty reviews?

Yeah, establishing an identity needs to be costly. According to my vague understanding this is part of what Keyhotee does, right?