@ChaosDAO 

1. Avata's decision to launch on Polkadot is driven by strategic alignment with the platform's capabilities rather than mere financial incentives from the Treasury. Our long-standing involvement and previous contributions to the community.  We're focused on leveraging Polkadot’s unique features—shared security, robustness, and openness—to effectively transition large Web 2 companies into Web 3 in compliance with new DPP regulations. This is a choice rooted in strategic alignment with our goals and the technological benefits of the Polkadot ecosystem. 


Additionally, In October 2023, we engaged with Polkadot and specifically Parity Technologies, signing and NDA/LOI to deploy on Polkadot. At that time our platform was not fully developed and ready for deployment. This is why we are presenting this proposal now, as our platform is live with merchants and ready for deployment. 

2. The need for an insurance product in the Polkadot ecosystem, as proposed by Avata, is not only timely but also critical, especially in the context of attracting large Web 2 companies to the Web 3 space. Avata, with its strategic focus on bridging these major players from the traditional digital landscape, recognizes the unique challenges and requirements that come with such a transition. The introduction of new Digital Product Passport (DPP) regulations adds another layer of complexity, as compliance becomes a significant concern for these companies looking to expand into decentralized platforms.

Importance of Compliance and Security: Many large corporations, already successful in the Web 2.0 framework and generating hundreds of millions in revenue, are now required to adapt to new DPP regulations. This transition isn't merely optional but a necessity for continued operation and expansion in a digitally evolving world. For these companies, the move to Web 3.0, facilitated by platforms like Polkadot, must ensure that their vast user bases and sensitive data are managed in compliance with these new standards. The insurance product Avata proposes would play a pivotal role in this scenario, offering these corporations a safety net that mitigates the risks associated with data breaches, system failures, and other cyber risks inherent in the decentralized nature of blockchain technologies.



Creating Trust and Credibility: By introducing a tailored insurance product, Avata not only enhances the security features within the Polkadot ecosystem but also significantly boosts the trust quotient for these Web 2 entities venturing into new territories. Trust and credibility are essential currencies in the business transitions of this magnitude, especially when stakeholders are wary of the vulnerabilities associated with emerging technologies. Insurance acts as a promise of recovery and continuity, assuaging fears and showcasing the ecosystem's maturity in handling enterprise-level needs and concerns.

Attracting More Users and Enhancing Ecosystem Growth: Avata's role extends beyond merely facilitating the technical onboarding of these corporations. By ensuring that these entities feel secure in their transition, Avata effectively advocates for the robustness and reliability of the Polkadot ecosystem. This not only helps in retaining the businesses that make the initial move but also acts as a strong testimonial to potential entrants, thereby attracting more substantial investment and interest from other large players. The ripple effect of increased activity and participation in the Polkadot ecosystem can lead to more innovations, higher transaction volumes, and ultimately, a richer, more diverse blockchain network.

3. 
Recognizing the challenges that new teams face in raising funds to launch on Polkadot, Avata supports the idea of 'pump priming' to energize the ecosystem. This initial support is not just about financial assistance but about building a sustainable platform where large enterprises can operate securely and in compliance with new regulations. By facilitating early projects and reducing entry barriers, we're not only fostering a more vibrant ecosystem but also demonstrating Polkadot's potential as a secure and compliant platform for significant global players. This approach will ultimately lead to a more robust and diversified ecosystem, attracting further investment and innovation.

@saxemberg 

Market Readiness and Asset Growth on Polkadot:
Avata recognizes the emerging nature of digital and tokenized asset markets, including those on Polkadot. Our platform is crafted to scale and evolve alongside these markets, providing customized insurance products that adapt to changing risks and growing asset pools. We offer plug-and-play solutions that integrate seamlessly with merchant systems at the point of sale. Importantly, our product is not in the developmental stage; it is fully operational and currently serves multiple clients. Our aim is not to secure funding for product development but to integrate with Polkadot and position it as the preferred blockchain partner for our clients. These clients often engage with us as their initial point of contact in the blockchain space. By incorporating insurance, we add a crucial layer of trust and safety, which is vital for the large corporations we are bringing into the blockchain ecosystem.



Concerns About Premature Insurance Initiatives: While it’s valid to question the timing of introducing insurance products given the current stage of asset development and tokenization on Polkadot, Avata’s approach is proactive. The platform is built to offer embedded insurance solutions that cater to both existing digital assets and newly tokenized real-world assets (RWAs), addressing immediate risks such as theft and data breaches, which are already significant​.
Our model focuses on delivering insurance services through direct partnerships and merchant integrations with established partners. Avata collaborates with well-established insurance providers such as AIG, Chubb, and HDI, who contribute robust insurance pools for claims management. Together with these partners, we have developed a diverse range of insurance products tailored for the crypto industry, including Digital Product Passport (DPP) insurance, coverage for Digital Asset Marketplaces, and insurance solutions for Web3 Travel and Gaming sectors. Additionally, with an insurance pool of $125,000, we can underwrite up to $2.5 million worth of policies. The risk percentage of a claim is set at 5%, indicating that for every $20 in policies, we need $1 in reserve to cover potential claims. This equates to $5 for every $100 in policies, effectively applying a 1:20 multiplier. Hence, our $125,000 pool allows us to manage a substantial policy value, calculated as $125,000 multiplied by 20. To persuade our insurance partners that Polkadot is an advantageous platform for establishing their presence in the blockchain space, one strategy is to initiate the first segment of the insurance pool directly with Polkadot. Demonstrating Polkadot as a robust partner can encourage them to contribute to the remainder of the insurance pool, reinforcing the benefits of collaboration and integration with this blockchain.
We want to build on Polkadot's technology because we see several advantages with the chain. Such as shared security, robustness and openness to iterate making it our preferred choice. We are already collaborating with our insurance partners on several other chains, including Ethereum, Polygon, and Camino. We have established a close working relationship with MetaMask and Consesys, and our participation in the bespoke Consensys Software Startup Program has successfully integrated us into their ecosystem. **

Historical Inefficacies of On-Chain Insurance Products:
**The skepticism towards the efficacy of on-chain insurance products is understandable given past shortcomings in claims processing and coverage adequacy across various platforms. Avata addresses these concerns by integrating advanced technologies like AI to support risk calculation, fraud detection, and claims processing. This approach is intended to enhance the reliability and user experience of insurance products tailored for digital assets and RWAs​​.

Avata's Approach to Market and Product Development: Avata is strategically positioning itself in the market by not only insuring digital assets but also by creating a bridge to tokenized RWAs, tapping into a broader spectrum of digital economies. With an emphasis on comprehensive coverage and accessibility, Avata aims to mitigate the risks highlighted and foster greater adoption and trust in insurance products within digital asset ecosystems​​.