A US-based insurance firm plans on combining blockchain tech with crypto to provide adequate insurance for subsistence farmers globally, especially African farmers.
Highlights Of The DAO Terms
Through its Lemonade crypto climate coalition (an autonomous DAO), the Lemonade foundation plans to provide subsistence farmers with low-cost insurance. The insurance partner (parametric insurance) will give insurance payments to any farmer who has lost his farmland or produce because of rain, excessive wind, or any other ‘trigger event.’
The avalanche-based DAO is supported by Avalanche, DAOstack, Chainlink, and others. A top-level executive of the foundation explained that “it is easier for us to utilize the decentralized nature of the Web3 space to provide low-cost climate insurance for farmers than using centralized insurance policies. Similarly, smart contracts and oracles are easier to deploy than insurance policies and claims professionals.”
Protecting African Farmers Through DAO
The world bank data on agriculture reveals that 90% of the 300m African farmers rely on the proceeds from their farms to live. Hence, any drastic climate change will adversely affect their lives. CEO of Pula, a Kenya-based insurance tech firm, claimed that Lemonade’s crypto climate coalition initiative is a less expensive option than traditional insurance, which is quite costly.
This initiative allows farmers to use stablecoins or fiat to buy insurance, and they can receive their insurance payouts in the same way they paid for it. Stablecoins is the most advisable crypto for making payments as it shields farmers from the volatility associated with making payments through other cryptocurrencies.
The Key To A DAO
A smart contract is a key to any DAO. This contract is usually a line of code residing on the blockchain and performing specific actions under certain parameters. A simplified example of a smart contract is “pay Joel x$200 when his temperature rises to 40 degrees” or “if Will contributes 9 DOGE, pay him 0.1 BTC.”
However, this Lemonade insurance initiative can be a complex example of a smart contract. The insurance claimant can only get paid once certain conditions under the insurance policy are fulfilled. The smart contract can become more complex by adding triggers or other features like that of a special purpose vehicle.
Part of the policy of this DAO would be the climate change that determines whether a farmer becomes eligible for payment. This policy would be contained in the DAO’s oracles, special code bits.
These oracles will provide the blockchain with relevant data that helps the DAO decide whether to pay the farmer. Once the DAO confirms that the farmer is worthy of payment, the farmer receives the compensation instantly without any interference from any third party.
Commenting on this initiative, Chainlink CEO, Sergey Nazarov, remarked that this blockchain-driven insurance program is an excellent example of how blockchain-built innovations can assist with financial inclusion globally. Nazarov further disclosed that Chainlink is ready to help this initiative with its oracles tools as its corporate social responsibility for farmers dealing with cold climate conditions during the farming season.
