The NFT-based insurance protocol designed by Zignaly has a unique selling point; unlike other insurance types, where the insurance broker’s best interests are always the bottom line, or one where fine print is used to evade paying out claims, Zignaly’s insurance protocol is fully designed by its own customers. This means that the customers’ best interests have been considered and given highest priority while carving out the insurance model. Along with this, the insurance mechanism is now allowing new, inexperienced traders to maximize profits by minimizing losses as much as possible.

For the first time ever, new traders not only conduct expert level trades through Zignaly’s profit sharing service but also have the opportunity to protect their entire trading portfolio simultaneously. By keeping the customer’s interests in mind, Zignaly’s insurance model, by default, is also able to protect itself when needed. This results in a no-compromise insurance ecosystem ensuring security, safety and transparency.

At issuance, a newly minted NFT insurance policy provides a sense of security to traders, both new, and experienced. Zignaly’s insurance NFT wraps all of the paperwork and physical underwriting procedures into smart contracts that have executable conditions; tokenizing the entire underwriting and issuance process and removing the role of a third party. Since an NFT is a form of distributed ledger technology, all interactions that occur with the specific NFT(s) are recorded on a general ledger and are immutable, forever. This makes it very easy to track insurance contracts as they all appear in the user’s blockchain wallet. Unlike traditional insurance fine print which is left to legal jargon, the insurance smart contract follows a mathematical model for the underwriting process, ensuring that the fund is never depleted or goes below a permissible threshold. This ease of issuance, frictionless claim process, and mathematically modeled underwriting, creates the first automated crypto trading insurance tool.

Insurance NFTs on the Zignaly platform

An Insurance NFT on the Zignaly platform is only active for a maximum of 1 month from the time of purchase and after the stipulated time lapses, the respective NFT is burned out of existence. The user as the owner is now left with a digital collectible which they can store and view at any time. While the core utility of these NFTs is to represent a given user’s insurance policy, the long term value of these NFTs is so users can memorialize their investing experiences on Zignaly and still have a piece of their journey with them. Traditional insurance companies model the minimizing of the amount of capital required to make sure all claims can be made at any time. They try to minimize this as much as possible to lower the risk they take by providing insurance as a service. Zignaly’s insurance protocol offers an unorthodox approach where the insurance fund value itself always remains at least equivalent to the total value of the insurance policies active at any given time. A fund value formula is used to keep tabs with the change in fund value over the course of a specific trading month.

Fund Value Formula - How it works and what makes it different

The fund value formula is a function of all debits and credits that occur within the insurance protocol. The method of determining the health of the fund relies on knowing all deductions/payouts the fund will be performing during a given month while forecasting the amount of funds being brought in through the revenue of insurance NFT sales, sponsorships, Zginaly itself, limited edition NFT sales and more, over the same month.

Due to this unique formula, even when the insurance pool is fully exposed and all available NFTs are sold out, it is never in any danger of defaulting on itself during any month of trading. This adoption of risk-averseness is then passed on to the user who is guaranteed a payout no matter how extreme the circumstance may be. Since the insurance pool is specially designed to cater to events of mass volatility and subsequent liquidation, Zignaly wants to ensure that its users are affected the least in such scenarios when compared to the rest of the market, all while protecting its own cash reserves.

According to the formula, a user can purchase as many NFTs as the fund allows, with an upper limit being capped at the maximum of the user’s total account value. This means, for an account value of $1000 the maximum number of NFTs a user can buy is 100 as 1 NFT provides 10 USDT of coverage while costing 1 USDT.


Stay tuned for more exciting announcements pertaining to the creation and deployment of the insurance protocol, as well as how and where you can purchase ZIG!

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