In this insightful #TFoN podcast episode we dive into the world of digital asset security with Viroshan Naicker, CEO and Co-Founder of Plural Finance. Discover the essential steps and strategies to safeguard your valuable digital assets from potential threats and vulnerabilities. From understanding the importance of secure wallets and decentralized finance to exploring the latest industry trends and best practices, this episode is a must-listen for anyone looking to protect their digital wealth.

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Plural Finance - Secure your digital assets

Participants:

• Nadja Bester (Co-founder of AdLunam)

• Dr. Viroshan Naicker (Founder & CEO Plural Finance)

00:22

Nadja

Hey, web3 world. This is Nadja Bester from AdLunam and you are listening to The Future of NFTs, the show that looks beyond current NFT use cases to what non fungible token technology is evolving into. All of this as seen through the eyes and built by the minds of the fascinating guest speakers that we speak to each week. AdLunam is building the industry's first IDO Launchpad with a Proof of Attention allocation mechanism. And the reason that we deep dive into the world of NFTs each week is because as an investment platform, we are contributing to The Future of NFTs. Through our Engage to Earn model, which is powered by dynamic NFT investor profiles, investors in IDO sales are able to leverage their Proof of Attention scores to receive allocation and share their allocation through fractionalized NFTs. Now, today we have on the agenda a very complex topic that hopefully we are going to demystify over the course of the hour.

01:24

Nadja

02:36

Nadja

So there's a lot to cover in today's show. And Viroshan. Well first of all, welcome. Thank you for accepting the invitation to speak with us today. Very excited to hear. Well, first of all, what you guys are building at Thorough, but also just your more general sense of this convergence of insurance and Web3 using NFTs as a medium, which is even more interesting. And then I would also love to hear from you just how the average listener out there can make sense of the topics that we are talking about because it is highly complex. I think even though a lot of people work with insurance, they don't necessarily have the nuanced understanding that someone does who is a lot more professionally involved. So yeah, very happy to have you on the show today. Welcome. Yeah, over to you.

03:30

Viroshan

Yeah, thanks for having me. It's the 4th July so it's a good day to be talking about NFTs and the future and how we build sort of a new financial system with the pieces of blockchain and with what we know, which was always my starting point for getting into Web3. I think that finance is very expensive and so we have to find ways to build alternative means of finance that can be more inclusive and equitable. So I can tell you a little bit about the history of Plural and then a little bit about what we're doing in terms of trying to bridge the gap between conventional insurance, which is very structured and regulated, and insurance in web3, which is the complete new frontier that we think nobody quite has got right. And we're hoping to be amongst the first to get this right and make web3 resilient and safe.

04:31

Viroshan

So my background is obviously very technical and I was working as a consultant and about ten months ago, through a random interaction, founders Factory in London approached me to pitch for an in house startup that they were building. So they have a Venture studio and within that venture studio they build out 16 complete startups per year and then spin these startups out as businesses and look for a second round of funding. We started in the Founders Factory Venture Studio trying to figure out what insurance should look like on web3 and where does one start? We interviewed a lot of people and eventually landed on most people. An NFT is you buy an NFT because it's an extension of your identity, because you like it and it represents you digitally and losing your NFT because of a wallet train or because you clicked on an incorrect link is really painful.

05:33

Viroshan

So we wanted to figure out how do we solve this pain point for the consumer in Web3 and how do we make the experience as a whole not as painful. So that was our starting point. And to get to do insurance, even for something as simple as saying we'll cover you for 80% of your NFT if you lose it, is very technical and very complicated because insurance is the process of risk transfer. So you have one group of people, we call them insurance takers, who want to transfer their risk to another group of people who we call on our website, insurance makers. And risk is something that's quite intangible. I mean, how do you measure risk? It's not something that is a good that is easy to price and the whole shebang that comes with insurance, actuarial science and underwriting management and sort of complicated risk calculations as well as regulations all about the pricing of risk and the transfer of risk between parties.

06:49

Viroshan

So the question is how do you make something that's intangible tangible? Well, the straightforward answer is you have to do a lot of math and you have to model out how people will behave in certain situations and just find ways to ensure that they behave in accordance to the agreements that are set up. So in traditional insurance, you have regulators that regulate the insurance industry to make sure the insurer behaves how it's supposed to behave because insurers hold a lot of power because they hold the money and they decide on claims. And our goal in setting up plural was to build almost like an autonomous independent system with a balance between people buying policies, people holding resources and people validating claims. So that's really what we describe in our technical white paper and then to focus in on how to address the situation in a web3 way.

08:04

Viroshan

So we build all this infrastructure on blockchain and we use the transparency of blockchain to make insurance very auditable and precise. So anybody can see where their claim is in a claims process, they can see that funds have been reserved in order to pay that claim. And there is a kind of concord between different sides of a multi sided marketplace with respect to the insurance product being provided by the system and the process that the system is engaging with in order to manage policyholder expectations, underwriter expectations and claims. Okay, so I've probably lost a lot of people with that answer, but I'm happy to go to another question or if there's anything that I've said that you want me to reflect back on, I'm happy to do that too.

09:07

Nadja

Yeah, actually you answered a number of different of my questions in one question, so you definitely are extremely thorough. I love that. So you've given us a lot to dive into. I think that you've touched on so many different points that I really want to spend a little bit more time on. So I'm going to go into some of the ones that kind of came to mind for me first. As you were sharing, you mentioned resilience and you also mentioned this on your website. So as I listen to the offering that you guys are building for web3 industry, it really reminds me of almost this growth cleansing, because I think for many people, everyday people out in the world or whatever level of society that you function at, as soon as you start engaging with insurance, it does add a different dimension to your life.

10:07

Nadja

Whether that is the security, the sense of security you have, or whether it's the sense that you're overpaying for your premium or whatever the case may be. But insurance plays a tangible role in one's life in terms of how the world works and what your place is in it, if we can look at it philosophically. But I think another aspect of insurance that very often people associate with is it's very opaque. You paid a premium every month. And at the same time, when you need it, there's a lot of terms and conditions that you might not necessarily understand or have been aware of. So it sounds as though if I go back to this term of the great Cleansing, that as we move into new technologies in web3, which is, of course, underlying many of the changes within society. If you move on to the blockchain, for example, it sounds like you guys are cleaning up the insurance industry, so to speak, with this offering.

11:09

Nadja

So I want to get back to this word you used about resilience. How do you see this word in terms of Web3? As we move out of that sort of legacy systems? The financial legacy system, the Web3 technology legacy system, how do you see Web3 playing a role? In terms of kind of moving people along toward a more transparent approach that, as you said, as system you are building that is autonomous and independent. How do we move society? I guess into these roles. What role does resilience play in this scenario?

11:55

Viroshan

So the side story was that last year, before Plural came along, I was really focused on becoming more resilient. So I started doing things like intensive workouts and ice baths and breathe workshops. So it was really funny that insurance would land on my plates as a project while I was thinking about resilience. That's part of why resilience was kind of woven into our DNA as a business, then the other to zone in specifically on society and insurance. Insurance is something that helps you recover when you've experienced volatility. So if you don't have insurance, then you're self-insuring in case something volatile happens. So say you get in a car accident and you don't have insurance. Then what you're doing is you're relying on your own capacity to recover from a loss. Now, if you do have insurance, what you're relying on is the capacity of some system.

13:10

Viroshan

So it could be like you and your friends agree that if any one of you gets in a car accident, then all of you will share the costs. For example? So that's a typical example of a mutual, those are just resilience happens when we have systems in place that help us recover from volatility. So whether that is like internal resources. So resources that you have on your own. So like being physically healthy and resilient and being able to resist disease is one kind of resilience but also being connected to a network of support is a different kind of resilience. And that is pretty much why we build connections, why we build social relationships, so that we are better able to navigate a volatile world and manage and tame that volatility. And humans have been very good at managing and taming volatility. This is like a very fundamental thing as part of the human condition to deal with Volatility.

14:27

Viroshan

And Insurance just happens to have evolved as a monetary way to recover from a specific set of volatile events or from the exposure that we happen to have. We started off with this very philosophical position of how do we make Web3 resilient and what we saw is that web3 is 99% capital market and only 1% of web3 happens to have any kind of insurance cover and what gives Web3 a bad reputation is risk. So people getting wallet drained or losing DeFi protocols getting hacked, depositors’ funds being withdrawn, rug pulls happening. Unfortunately, web3 may be an ocean of good, but what the mainstream media portrays about web3 are these little drops of all the bad stuff that has happened and people keep track of. Like web3 is doing great. There is a website called Web3 is doing great and they just track hacks and scams.

15:50

Viroshan

Over the last, I think like seven or eight years were looking for a way to address risk and get rid of or transfer risk from one party to another using blockchain. And what we see is that there is this capacity and there are plenty of whales in crypto who could absorb the risk of the rest of the market provided that the modeling was done correctly. So the models that actuaries use to price risk and if this condition would be met then you would have kind of like a network effect of network resilience where one side of the market would say I want to be protected if I have made a DeFi deposit into these protocols. And the other side of the market would say I have the resources to protect you in case of emergency. So it's a question of how do you get the agreements right between these different sides of the market and how do you use the technology that we have, specifically the rules of token behavior, which can be embedded into a smart contract.

17:14

Viroshan

To create that agreement, there doesn't have to be like it's not a free offloading of risk. There would be a transfer of value between parties. So the thing is it's already in web3. I mean if you think about Ethereum you have the proof of stake community that's actually supporting the rest of the ecosystem to maintain the integrity of transactions. So why can't we do a similar but different approach? So we have a community that is supporting the integrity of the system when the system experiences volatility in order to obtain some reward in the short term. So this community has capital, that capital is allocated. If something should go wrong with a protocol, the people using the protocol pay the people with the capital for underwriting services. I mean that's basically insurance. We just need to figure out the right way to do it and the right way to manage risk at the scales that we're talking about.

18:39

Viroshan

So NFTs is a small problem which will teach us a lot. DeFi is a big problem which we would like to solve because if we uncork the bottle that is DeFi, then we can see all kinds of financial change happening all over the world, which is something that our team would be very happy to work on for the next however many years. If we can make finance and banking more accessible through DeFi, it's a completely different worldview in five to ten years time. Okay, I think. Next question.

19:26

Nadja

Perfect. I wanted to say that apart from being extremely comprehensive, which is another thing that you don't often come across in terms of definitions, I think your definition about really the crux of what insurance comes down to as this protection against volatility, it really drives the point home. But what I also loved is this idea of self-reliance versus reliance on capacity of a system. And as you were talking about network resilience because I think within web3 so many people see themselves as of this network resilience, whether that is in a technical sense or it's in a more alternative view of what the economy should look like sense or society should look like the more philosophical tenets. But generally speaking, there are topics that most people would steer away from. Let's talk about regulation. Most people who are very bullish on web3 would not see that as their favorite topic and traditionally insurance has not been one of those topics that kind of gets people excited to talk about.

20:36

Nadja

However, I think it's so interesting the way that you are using the technology that's available in order to solve many different issues, including what you are saying about NFTs almost being like a stepping stone in terms of gathering these learnings and then applying them to DeFi. So it's interesting to me if you look at the incorporation of certain technologies and how you kind of put them together, it does seem like, let's say the emergence of insurance in web3 might even mature the market, the industry in a positive upwards trend, as opposed to something that is seen as ODS, just simply more kind of top down regulation. Because there's two arguments to the coin. Because I sometimes speak to people who don't want these kind of activities on chain because again, it feels like too much of a top down and move away from the autonomous nature of, let's say, bitcoin.

21:41

Nadja

So I'd love to hear your thoughts on how having more approaches like this really is positively contributing to the maturation of the industry.

21:55

Viroshan

Okay. I think I'm going to answer this by telling a story. And there's a book called I think the title is like, How Stuff Works, or it's written by a mathematician. His name is Jordan Ellenberg, and he talks about the statistics of fighter planes that used to come back after World War II and there would be sort know, bullet holes in certain parts of the plane. And so the question was, where do you put the armor? So the first answer that comes to mind is like, you should put the armor where the bullet holes are. So they gave this problem to a mathematician or statistician at this time, and he just said, actually, that's just dumb. You should put the armor where the bullet holes aren't, because those planes that didn't come back, they were shot in the places where the bullet holes aren't, and the planes that came back, well, it didn't matter where they were shot.

23:09

Viroshan

So you don't need to put armor there because they still came back. It's counterintuitive. If you behave and say in a way that says web3 is fine, we're still surviving, because they're all of these bullet holes and we're okay, then you're not looking at all the people that left Web3 because they started off and lost an NFT because of a wallet train. Because those people aren't reporting their statistics. They're not in the ecosystem. They've already dismissed web3 as something that they don't feel safe and comfortable using, and once they've left, it's very hard to get them back. But if you say to those people, okay, we recognize that web3 is challenging to get into, it's risky because it's not always clear whether somebody is a good actor or a bad actor. And what we can offer you is a way to hedge your risk that has been tried and tested and evolved from within the ecosystem to solve the ecosystem's own problems, then that's a much more compelling argument to a normal user to stick around than web3.

24:29

Viroshan

So this is part of why insurance is really an important stepping stone to web3 becoming mature. And it's an important stepping stone to having people trusted at scale as well as just using it for things like web3 gaming. I mean, the web2 approach is, we have information stored in a database. If you can show that you are hacked, we can just undo the thing that happened in the database in web3, you can't undo the thing that happened in the database. But for example, one of our partners has built a solution where if you put a condition on your NFT that says, do not transfer this NFT out of my wallet, and something initiates the transfer of the NFT. What? They will try to do is front run the transaction that's initiating the transfer. Put your NFT in a smart contract and then send it into your backup wallet before the malicious transaction can act.

25:33

Viroshan

Now they're successful like 99.5% of the time in their testing environment using this approach. So the question is, what happens in the last 5% when the malicious transaction occurs? So that's when Plural would step in and add an insurance layer. And so you've now protected the user 99.5% of the time from losing an asset, and if something should happen, you're able to transfer the risk of the loss onto a third party underwriting or onto a network of support that absorbs the risk a lot easier than an individual would absorb the risk. In this case, what we're doing is we're saying if you're going to build these complex systems, you also need breaks and buffers because those breaks and buffers stop the system from completely crashing and then having to restart itself. On a small scale, this problem happens to be I lost my NFT and nobody's going to replace it.

26:45

Viroshan

So I'm no longer in the community that I was participating in and I have to get another NFT in order to rejoin that community. And on the big scale it is we're a DeFi protocol. We took a bunch of money from people, somebody hacked our smart contract and initiated a wallet train. We can't give that money back. Those people then can't recover their funds. They've had a bad experience in web3 and then that's it. They're lost as a customer of Weber and they go back to saying, well, conventional banking is great, I don't know anything that happens, but at least I can trust the regulator to sort out my problems. Our perspective is really that we need to build almost like you can call it an immune system, but it's also an immune system plus reserve resources where those reserve resources become available in order to counterbalance volatility and to stabilize the system when there's extremes happening.

27:53

Viroshan

And what you're basically saying is we put aside some of our resources in order to address risk when the risk occurs. Yeah. So at least that's my answer. I mean, you can tell that at some point I used to teach math to first year students and I've had to explain things very carefully to them not using complex language.

28:21

Nadja

Absolutely loving it. I think there are some students who might be able to use this episode on education, on insurance, and web3. So thank you so much. So I have a question, obviously in terms of risk. I mean, as you've highlighted, risk is one of, well, the biggest risk factors in the sense that we might get an initial adoption by people entering the industry, but as soon as they have these bad experiences. And unfortunately it's so easy to have a bad experience. Especially if you are not as clued up about all the different scams out there. And CD platforms. And CD characters. Luring you into CD platforms? And we know that it's really a mess if you are someone coming in off the street, so to speak. So there's so much loss happening there with these bad experiences. But then of course, the other side of the coin is the fact that risk is also due to the volatility of the market.

29:18

Nadja

Now I mean it's a no brainer why? It's not nearly as easy to insure against market volatility. I want to kind of throw something into the bush and have your thoughts on this? Do you think that there is a future in store for web3 where there could be more of an insurance against these highly volatile market factors? Or do you think it's something that because this ties more closely to the whole concept of regulation, of course is a different conversation altogether. But I'm wondering in terms of the economics of web3 or the technological capabilities, if you think there might be a future where insurance companies are more easily able to consider hedging against great market volatility.

30:10

Viroshan

In the traditional world, insurance companies don't hedge against market volatility. Insurance companies are like highly risk averse and what they do is they sit on sort of capital that's been generated over 200 years. So, for example, Aviva, which is one of the sort of investors into Plural indirectly through farmers factory, has $450,000,000,000 of assets, but they're a 200 year old company, so they've been selling insurance for a long time and being very risk averse in the traditional sense. The companies that are supposed to sort of help against market risk are hedge funds. And hedge funds are a completely different ballgame. Their sort of alameda research would have been the equivalent of a hedge fund in crypto. And the way to hedge against market risk is you take up two positions in the market, so you take up an option to sell and you buy an asset.

31:11

Viroshan

And so if the price changes, you would then be able to get an easy exit. So that's not something that insurance is actually designed to do. What we can do with insurance is something like you participate in a protocol and that protocol pays you a yield. If you give up some percentage of that yield in the event that the protocol fails, then we will help you to recover some percentage of your deposits. So there the insurance would be the insurer looks at all protocols and offers this product across some spectrum of protocols so that if one of them fails, the insurer is still able to absorb the losses. That's really the difference. There's nothing that an insurer would legitimately do to help hedge against market risk. That's a completely different business. That said, I think we need to figure out what new financial instruments could be developed.

32:28

Viroshan

There's also sort of aggregating risk into portfolios and things like that which we've seen. So you don't buy individual cryptos, you buy an average of the top 100 of cryptos kept in some proportion and stock markets have been a good experience on how to do this. It just happens that crypto is a kind of a much more volatile stock market with less backing it and a lot more yeah, the scale of things is completely different and there aren't those buffers and there isn't an understanding of how things there isn't a regulator monitoring the entire crypto market. It is a retail market and part of that is volatility. No, this is not something that I would bet my insurance company on as a problem that we could solve. We're trying to solve sort of the problems that arise from bad actors. So I think I'm going to leave that one alone.

33:48

Nadja

No, perfect. That was the amazing answer. So on to what it is that you are focusing on. So I am the average user. I come to know about what you guys are Plural. Run me through because I know obviously you have expansion plans that are far wider than just what you are doing right now. But at the moment, run me through what would happen if I were to sign up initial stage of what Plural is focusing on and how would that work by step?

34:18

Viroshan

So for the initial stage, we're really just zoning on NFTs. The idea is that the NFT market is reasonably big. We can test out the infrastructure that we're using. And what we would offer a holder is if your NFT is moved from your wallet without you intending to move it. So you clicked on the link, you authorized a transaction that you thought was friendly, but it turned out to be malicious. Then we will provide an insurance facility that covers the loss or some percentage of the loss depending on how you set your policy up. But what that insurance product will also do is it will integrate into a service provider that will help front run any malicious transactions. So that service provider works with an AI company, that AI company scans contracts on the blockchain. And if it sees that a malicious contract is now trying to move an NFT, that process will kick in.

35:28

Viroshan

So that would be our package product that we would offer. And then we're looking at like, okay, well currently the value of NFTs is social. So it's a perceived value of a thing because everybody says this is what the thing is worth. Now, if you've obtained an NFT from somebody because it was a phishing link and you wallet train them, we need to make it difficult for you to sell that on the secondary market. So the other feature we're looking to integrate is to create a kind of trusted blacklist that can broadcast that. We've just paid out a policy for this NFT which we have verified was taken through a wallet drain. So this blacklist then broadcasts to different market actors not to buy the NFT that was obtained illegitimately. That's for example, a pure web3 social engineering setup that relies on people coordinating with respect to value.

36:41

Viroshan

So i don't fence stolen digital assets. So that would be our starting point. And if we're correct, then we should be able to do a few things. We should be able to build a capital reserve so out of insurance makers on the one side of the market that would provide insurance cover to NFT holders and then a collection of policyholders that would pay some premium every month and some of that premium would be transferred as yield to the capital providers using, of course, smart contract mechanisms where we as the insurance company inverted commerce, are not able to access capital unless the system says there is a valid claim. And because of this valid claim, we have to reserve this amount of capital in order to pay the claim 99% of that will be automated. Obviously, we have to protect the system from too many false claims, so there will be some mechanism that has to be put in place.

37:59

Viroshan

And then in the same way, we have to learn as we go in how to set this up correctly in terms of decision making. What our research tells us is that if you think about approving an insurance claim actually it's a consensus mechanism that happens internally within your insurer so now how do we take that consensus mechanism and recreate it so that we can get consensus on whether claim is valid or not valid? If you take nexus mutual and voting is a consensus mechanism on whether something happened or whether a claim should be paid. We just need to part of our journey and our research was to figure out methods for creating this on chain. So using things like Staking, for example, as a way to do insurance, it's like step by step, we're looking at how do we service the communities of traders that have high turnover NFT portfolios?

39:10

Viroshan

How do we service the community of art collectors that buy NFTs in order to keep them? How do we service blue chip NFT holders who are looking for value or flipping NFTs quite regularly? Those are our customers for this kind of COVID and if we're successful in, for example, NFT insurance, we can look at more general products like coverage against arbitrary wallet drains. So if you have NFTs and tokens in your wallet and all the preventative measures fail, will we make good on the contents of your wallet as an insurer? If you are a policyholder. So that would be, I guess the step after NFTs and then further down the line it is going to be an intensive modeling and research journey where we need to get into the guts of DeFi to understand how protocols interrelate with each other and sort of how effects within one protocol will translate into effects in others.

40:27

Viroshan

Because if you go into that direction with insurance, the risk for you is that you as the insurer are ensuring correlated behavior. So if one protocol collapses, will it cause all the other protocols to collapse? In which case you are going to wipe out your underwriters. The goal of insurance is always to protect it seems like it's to protect the insurer but actually the goal of insurance should be to protect both the policyholder and the underwriter concurrently without taking sides and that's quite a hard balance to strike so starting with NFTs is the ideal entry point and it's consumer facing. We do have to have conversations with regulators to make sure that our product is compliant or that regulators at least are happy to put us into a sandbox for a couple of years so that we can fully document and show that actually there are new and interesting ways of doing insurance on blockchain.

41:41

Viroshan

And this is a valid way of doing insurance, particularly for digital assets.

41:50

Nadja

Okay, yeah, I mean a lot of exciting pit stops on the roadmap up ahead. I also completely agree with the staggered approach because I think so many amazing ideas are birthed in web3, but it's not able to come to fruition in the timelines that projects sometimes promise and often that's simply because the time is not there yet. It's too early, and building it step by step is really the way to get there. But I'm curious because we've been touching on how these technologies are facilitating growth and a managed degree of risk of the web3 industry. But I'm also curious in terms of the traditional insurance industry, what future do you see for blockchain technology, for smart contracts, for DAOs? Do you think that there is a future where this will become the standard even with the traditional insurance industry or do you think it's something that kind of will stay within web3?

42:53

Nadja

And as more insurance companies take on also web3 within the portfolio, so which direction do you see the growth and the adoption flowing in?

43:06

Viroshan

There's a couple of different directions in terms of insurance and web3. So one way to look at web3 is that web3 is a big capital market and insurers are capital hungry. So a big part of insurance, traditional insurance is the cost of capital. And if web3 capital can be cheaper than banking capital, then insurers will use it for underwriting. So there are a couple of companies doing this. It's mainly people building liquidity pools and then selling capacity from that liquidity pool to say, a travel insurer or some sort of insurance brokerage. So that's one part of it. The other part of it is really quite subtle. So insurers hold lots of data on their policyholders because in order to build good risk models, you need good data. So if you're selling car insurance, you want to sell car insurance to 90 year old grannies who never drive because that's a really good bet on ever having to pay out insurance.

44:16

Viroshan

I mean it's being cynical, but this is the way that this is the ideal customer for an insurance company, whereas a 20 year old who just got a Porsche is not an ideal customer for you. So you're going to charge relatively more to people that are more of a risk to your business and relatively less to people that are less of a risk to your business. So it's all about risk management and a good example of that is discovery in South Africa, where through their loyalty program, they're able to collect lifestyle data and use that lifestyle data to inform the pricing of their health insurance products. It's a data game when it comes to insurance. And what web3 is very good at is building siloed data vaults and using that siloed data and leaving that siloed data in the custody of the data. So for example, ocean protocol has been around for a long time.

45:29

Viroshan

You can upload a data set, put it into a closed environment, and somebody can run an algorithm on that data without taking the data off site or even looking at it. What they would get is the result of the algorithm. From an insurance perspective, you could see insurance in the future where you as a user still own your data. The data is put into a data vault, and an algorithm is run on the data without compromising the privacy of that data. So I think that's a really interesting angle and use case from web3 to web2, which has nothing to do with finance, it's purely a combination of you as an insurer can build a better risk model with more accurate data the user. From a consumer perspective, I'm a lot more comfortable with sharing my data through a data vault than somebody harvesting the data from me and keeping it forever and not getting any value out of it.

46:37

Viroshan

So there are some experiments we're looking at, we're partnering with people in sort of the energy sector to look at, well, energy utility providers don't like to share data. They especially don't like to share data with their competitors or with financial services. And so financial services tend to be like, insurance tend to price on the average price for insurance coverage, and the coverage doesn't kick in at the tail. So you don't get coverage if your solar panel farm goes down for 30 days or if it's down for more than a year. But if we would get better data on these sectors, then we could provide web3 to web2 insurance, which is data enhanced, and we could provide insurance coverage on the tail. So this means that essentially we're not talking about taking over an existing market, we're talking about expanding the reach of a market and going into those pricing areas where the web2 traditional market wants to stay out of.

47:57

Viroshan

Solar energy is a big sector, it's not tiny. There's a lot of capital invested in there. And you have problems that are sort of very practical. An inverter can blow, it wipes out and stops an entire utility from functioning. And the company that built the inverter may have gone out of business, in which case it could take a year to source a replacement inverter. And then you have a year of not, of losing functionality and an insurance policy that won't pay out. And you as the owner of this asset is you're sitting with a dead asset for a year. So insurers can do a lot with more information and we can also create a lot more functionality in the market. So it's a question of being able to bring dead space online as opposed to just staying there waiting for somebody to solve the problem.

49:05

Viroshan

Like an insurer could solve the problem a lot quicker because they have a vested interest in that, inverter being fixed because they're also paying and they have data which they can use to coordinate. So these are edge cases that we're looking at in traditional insurance apart from the web3 angle. And we are doing it because it allows us to. If we hit a regulatory wall, we can branch off into other business avenues and still use the technology that we have in web3 in order to showcase that there are better ways to do these things and there's more range and there's lots of versatility that comes from people cooperating in a safe way.

50:03

Nadja

I'm mindful because I see we have only five minutes left. So I want to try and get in two questions and if it's possible, one question from the audience. A reminder, if you have a question, please DM it through the AdLunam Twitter handle. So I'm going to try and get through both questions first. One that came to mind for me is we talk so much about mass adoption but on the other hand we are so aware of the risks and the losses. Do you think that insurance in web3 becoming a common practice and becoming available to people will lead to more mass adoption?

50:41

Viroshan

I think web3 gaming is interesting and I think being a part of web3 gaming and providing insurance on in game assets could be something in terms of conventional. Would my 70 year old mom go into web3? Maybe not. But if a web3 insurance provider was providing the back end systems for her healthcare plan, that's also a form of mass adoption. So yeah, I think it may be just like the degree of subtlety of the technology integrating into existing businesses could be one part. And then there's the direct, okay, there's a new asset class and we happen to see a lot of expansion of fractionalized real estate NFTs or whatever the use cases are. So I think that would be the answer I would give.

51:47

Nadja

Absolutely. I 100% agree with you. So final question, the Plural, I mean to me it suggests a focus on inclusivity, on community and of course a lot of that is exactly the tenets that we have in web3 as well. And yeah, happy 4th July as you said, beginning, I mean this idea of independence also comes to it. So would love to hear how does name tie into what you believe, what you say as the DNA of the company?

52:22

Viroshan

So we kind of are building around three things, creativity, resilience and community independence is part of it. Think showing that Web3 can solve its problems from the inside will be quite a statement. I would say that's a big part of our DNA. The people that I get to work with are really they've done lots. One of them helped launch a payments app and a developer consulting sourcing company. One of them was a board chair at Aviva. One of them is a medical doctor who led the negotiations for the British Junior Doctors Association. So I just have these awesome independent, competent people that I happen to work with and I think it's not just in the DNA of the company because we said it's in our DNA and how we did stuff. I mean, my CTO, they built an app called Mxit, which was an early chat app that had 60 million users and ran on feature phones like a couple of years before WhatsApp was even a thing.

53:49

Viroshan

I think it's in our nature to want to solve difficult problems and to find solutions to them and find ways to give them substance and bring them to the market.

54:06

Nadja

Yeah, I just want to say I'm from South Africa as well, so I use Mxit when I was still in high school, so it brings back fond memories. And I met Viroshan and some of the members of his team when I was recently in Cape Town and yeah, they really are incredibly intelligent and head screwed on right builders in the industry. So very fortunate and lucky to have you guys today and really just learn more about what these possibilities are within and then also this fascinating concept of Web3 supporting Web2. So I see we've run out of time, but I really just very quickly want to get in one audience question so what are some of the legal considerations around NFT? So very in terms of the insurance angle. Maybe if there's no legal claim on NFT as an owner, as being an ownership item for you in a certain country I'm not exactly sure what the question means, but if you can just give some thoughts on this topic before we close.

55:09

Viroshan

I can only answer from an insurance guess. So we would say that an NFT is an asset or it might maybe the representation of an asset. So if you fractionalize a piece of real estate and you embed a fraction of that real estate in an NFT, then the NFT is a claim on the real world asset. In some cases an NFT might be a claim on a data set which is a different kind of digital asset from, I think there are a lot of interesting legal definitions, but essentially you have a construct which has a unique identifier and then that identifier constitutes a claim on something. In terms of regulated insurance for NFTs, essentially, if people are willing to ascribe value to something and there is a market price for it, then we can ascribe insurance to that thing on the basis of that market price as being the going value.

56:28

Viroshan

We have a partner called Naboo, I think Naboo.xyz and their entire business model is just about finding accurate prices for NFTs and providing that data to different companies, including Plural. Yeah, okay.

56:50

Nadja

Awesome. Viroshan, thank you so much. If the audience wants to stay in touch with you and with Plural, where is the best place to follow you guys?

57:01

Viroshan

So you can follow the Plural account on Twitter and then if you want to join our discord is currently gated, but the password to get into our discord is very simple, it's Plural phi and then everything else lowercase. So you're welcome to join our discord. We have a couple of community building things that we're working on, including NFT Mints and just some other really original cool stuff. So thanks very much for having me. It's been interesting to get, I guess, interviewed and an absolute pleasure to be here. Thank you very much.

57:45

Nadja

Yeah, awesome. Thank you so much for your time. I definitely think that this episode could be a point of reference for people wanting to learn more about how the insurance industry works, and especially in the context of Web3. So thank you so much for sharing all of these insights and really just so many nuggets with us that I think as people want to get into more of these topics, then definitely do follow Plural on Twitter and Viroshan as well as for the audience guys, if you missed out on it. So we had our second Web3 pitch arena last week. It was absolutely amazing, some of really just incredible in the industry, showcasing to investors what they've done. So you can find this Twitter? No, sorry, we are right now on Twitter. You can find this on YouTube and join us again next week on Twitter.

58:35

Nadja

And if you're listening after the fact on Spotify, thank you so much for tuning in and we will see you guys next week for another episode of The Future of NFTs, brought to you by AdLunam. Cheers guys. Viroshan, have an amazing day. Are you in Cape Town at the moment?

58:51

Viroshan

I'm actually in Durban at the moment.

58:53

Nadja

Oh my goodness. Okay, so I'm very jealous because I haven't been to Durban in quite a while. So, yeah, send all my love to Durban. I can't wait to see and experience it again. In the meantime, you'll have to do it on my behalf.

59:06

Viroshan

Okay, will do. It’s the Belito pro at the moment.

59:10

Nadja

Lots of enjoy. Cheers us guys. Have a wonderful day. Bye bye.

59:15

Viroshan

Thanks.

59:16

Nadja

Bye.