Bridge Mutual CEO Mike Miglio Spoke At Investors’ Event Hosted by Vendetta Capital— — Recap of Bridge Mutual AMA @tutunamayan1ar
Thanks to our valued investor and strategic partner Vendetta Capital for arranging this AMA, which was taken place at 11 AM PST/2 PM EST on November 28, 2020.
Our CEO Mike Miglio answered the questions and chatted with Tutunamayanlar’s 9000 community members at the event.
Vendetta Capital has a large Turkish following, so the AMA was conducted in both English and Turksih.
The following of this article is a summary of the event published by @tutunamayan1ar.
First of all, we would like to tell you about the format of our AMA event. Our program consists of 2 parts. In Section 1, channel managers will ask their guests their own questions about the project, and the conversation remains closed throughout this episode. In Section 2, we will open the chat and get questions from the community. Our dear guests can also answer the questions they would like to answer. Owners of the answered questions are also eligible to win a prize. So let’s get started.
Section 1: In this section, Host Managers of the community asked questions to Mike Miglio.
Q1: Thank you for accepting our invitation. We want to start with the hardest question. Can we get to know you?
MM: Sure. I’m the current CEO and co-founder of Bridge Mutual. I am also managing partner of a boutique cryptocurrency law firm Wolfe Miglio that started in 2017, our clients include QTUM, Akropolis, Certik, Gate.io and many others. I first invested in the space in 2016 and have been involved in cryptocurrency full-time ever since.
Q2: Can you briefly tell us about Bridge Mutual?
MM: Bridge Mutual is a decentralized, DAO-governed, p2p/p2b discretionary insurance platform that provides coverage for stablecoins ($20b+ TVL), smart contracts ($15b+ TVL), and Exchanges (all of them). This is the best way to explain it in one sentence.
Q3: What makes Bridge Mutual special? Which features does it differ from other tokens?
MM: To fully explain all the difference would take more than 1 hour, but I’ll summarize quickly.
We are the first platform offering decentralized insurance for stablecoins and exchanges. This is the primary difference between ourselves and most of the competitors. The last time I checked, all of our competitors are only offering smart contract insurance, though this may have changed. Other than this, each of the platforms are using slightly different token models and voting models.
Q4: Why should people invest in BMI Token ? What are your differences from your competitors?
MM: To start off, I want to say that we respect all of our “competitors”, and that the decentralized insurance industry will require multiple platforms in order to survive. In the real world, insurance companies insure each other. This will also be the case in crypto. Having multiple active insurance protocols working together will de-risk the space as a whole, serving as a bridge for traditional finance to enter the space.
At the time of writing, there are a handful of insurance platforms in development. All of us are a little different from each other. The most prominent platform currently is Nexus Mutual, which has about $100M TVL. The primary ways in which we are different from Nexus are as follows:
1. We are migrating to Polkadot when Polkadot launches, this is to avoid high ETH gas fees;
2. We will not require KYC to use our platform or hold our token (Nexus requires KYC and only verified addresses can receive tokens.)
3. The value within our coverage pools are being re-invested automatically, on-chain to other protocols (20+) such as Aave and Kyber network in order to create a yield for our users.
4. Users on our network will receive a greater portion of profit sharing from Premiums.
5. You can buy insurance for stablecoins and centralized exchanges to cover crashes and hacks.
6. There is a 3-phase voting system that makes policy holders vote on the first phase, coverage providers vote on the second phase, and “trusted stakers” vote on the third phase. Trusted stakers are platform participants that have voted correctly multiple times in the past, and they receive a better reward than other voters.
There is more to add to this list, but the answer may be too long. I encourage everyone to download our pitch deck for more detailed information at our website: www.bridgemutual.io.
Q5: Usually people remember Insurance after damages. We saw many interesting cases in crypto attacks, liquidity crises, hacks etc. How can Bridge Mutual protect us against these crises?
MM: How the platform can protect you depends on the type of insurance.
For stablecoin insurance, the platform protects you in the event of a price drop, and the claims are handled instantly and automatically. For example, If you buy $1,200 in DAI today and then next week DAI crashes to $0.15 and didn’t recover, then you could easily make a claim on our app and be paid ~$1,000 instantly. This is an oversimplified explanation of how *stablecoin* insurance works.
The smart contract and centralized exchange insurance is different. It goes through a voting process involving the users on Bridge, and there is a 3-phase voting process in place to make sure people vote honestly. This system is much more complex than I am explaining here, but we can talk about it later.
Q6: Could you tell us about BMI token sales process?
MM: The BMI token and the platform will be launched on the same day. All BMI tokens being sold before launch are being done privately via SAFTs. The team has been very critical and selective of who it sells tokens to, and our private sale has been heavily oversubscribed.
The team has only given allocations to groups that meet the following criteria: 1) a strong influence on the market or an impressive following on social media; 2) does not have a reputation for dumping; and 3) understands the long-term value proposition of the project.
Because of how much interest there has been, we are expecting a strong secondary market demand after launch. Also, because the platform will be live at launch, we expect to see a large number of participants rushing to provide insurance coverage for their favorite projects.
Q7: Why did you choose Polkadot instead of participating in the Ethereum network?
MM: To clarify, Polkadot hasn’t launched yet and there is no official release date. Because of this, Bridge will likely finish development before Polkadot is launched. It’s possible to launch a private on polkadot, but it isn’t ideal for development or security.
In order to make sure that we can launch without issues, we are coding the project in solidity and launching on the Ethereum network. After Polkadot releases, we will migrate the project over to Polkadot via a solidity-compatible parachain (we want to use Edgeware).
The reason we want to be on Polkadot is to take advantage of the lower fees. Nexus Mutual is on Ethereum, and what we are seeing there is that people are not voting on insurance claims when it costs $5 to $15 in gas fees to vote. The chance of a claim being handled properly and honestly correlates to the number of people that are voting on that claim. If there is a low voter response, then valid claims could get rejected, and invalid claims could get accepted, damaging the platform’s credibility.
Q8: What awaits us for Bridge Mutual in the future, what are your plans?
MM: The goal for Bridge Mutual is to be 100% decentralized and DAO-managed. So users should look forward to being a part of our governance. In addition to that, we’re already exploring ways for Bridge Mutual to tap into some traditional market insurance. There are some platforms that focus on traditional coverage, and we’ll be studying them closely to see if we can provide an even better solution.
Section 2: In this section, the Community asked the questions, Mike Miglio selected and answered their questions.
Q1: It seems that many blockchain projects do not solve a real problem, they just exist to sell their tokens. What problems does Bridge solve exactly?
MM: There are a few questions like this, and I’m happy to answer.
In November alone there have been at least 10 hacks resulting in millions of dollars of value lost. Institutional money cannot invest or utilize the space because their funds are at risk.
For example, USDT is centralized and non-transparent, they haven’t had an audit since 2017. It is very likely that Tether is no longer backed 1:1 with collateral. How can large institutions keep their money in Tether without some form of insurance?
DAI has a similar issue. They are decentralized and have funds locked on-chain, but all decentralized projects are susceptible to hacks. Keeping money in the banks is still safer for institutions than keeping money in stablecoins.
Right now, our DeFi space is small: $15B in TVL in DeFi, $20B in TV in Stablecoins. Bridge and the other insurance protocols are going to serve as the “bridge” for traditional finance to enter into our markets. This is inevitable at this point. Once the safe in this space is enough due to improved securities, audits, and insurance, the markets will grow exponentially with the introduction of traditional capital.
Roughly $3.7 Trillion of the traditional insurance industry can be brought on-chain. Right now we are only at $100M to $200M. Over the next few years, this space will likely grow 1,000x to 13,000x.
Q2: Could you tell us about the factors that may pose a risk for the Bridge Mutual project?
MM: The biggest risk factors for Bridge Mutual’s success are: 1) Being hacked; 2) Implementing an inefficient DAO; and 3) Implementing a DAO too early on in the process.
Regarding the first point, Bridge is partnering with multiple auditing companies (5 to 15 companies, and perhaps more as time goes on). Part of Bridge’s core business model is to use these partnerships to continuously audit Bridge’s code for attack vectors and ensure that we are one of the safest protocols on the market.
In addition to auditing our own code, we will pay our partners to audit popular and upcoming projects in the space and we will publish those reports so that the public can see. After all the audits come in, we will give that project a “Bridge Score” between 1 and 100 that indicates how secure the code is at that time.
Right now, projects are auditing their own code, but this is a conflict of interest. 1 to 2 audits is not enough to secure millions of dollars, and some projects are changing their code after the audit and then stealing money from their users. Only independent audits paid for by third parties should be trusted, and Bridge will become an authority on the security of all projects.
Q3: Your website says you don’t want KYC from your users. What is the reason of this?
MM: KYC goes against the spirit of cryptocurrency and it’s a roadblock to adoption. Our platform will be truly decentralized. The team will never have custody of anyone’s assets on the protocol, and the team will not actively manage or invest the money in the coverage pools. All of the money will flow automatically, on-chain without interference from the team.
Q4: What measures will you take to ensure that the voting process runs smoothly and properly?
MM: I think this is my favorite question because it should be what users care about the most. As a user, you come to the platform to protect yourself from risk, you should feel safe in knowing that the process to pay your claim is trustworthy.
To start, stablecoin claims are handled automatically without human interference. If a Stablecoin crashes in price and does not recover within a certain time period, you will be instantly reimbursed once you submit your claim.
For smart contracts and centralized exchange hacks, it is more complicated than just watching the price. We need people to collectively do research and give their opinions on how to handle these claims, so we invented a 3 phase voting process.
Those that choose to vote in the voting process can be rewarded or punished based on their input. Those that vote in the majority are rewarded, those that vote in the minority are punished. The more dramatic the difference, the larger the punishment and reward.
In the first phase, other policy holders vote. For example, if there is a claim made for Uniswap, then all Uniswap policy holders will vote on whether the claim is real. If approved, it moves to the second phase, which is a vote between all of the coverage providers for Uniswap insurance. If approved, it moves to “phase 2.5” where people decide how much money should be granted to the claimant. (for example, if the Uniswap hack was for $100,000 USDT, it would not make sense to reward the claimant $1,000,000 USDT.)
If the claim is denied in Phase 2, then the claimant can appeal. If they appeal, it moves to Phase 3. Likewise, if the claim is approved in Phase 2, then the stakers can appeal if 25% of the money requests an appeal.
Phase 3 is voted on by “Trusted Stakers”. Trusted stakers are people that have a long voting history and have voted correctly in at least 80% of their votes. We trust these people to be more honest, and they receive a larger reward for being a Trusted Staker than those in Phase 2. Whatever the decision is in Phase 3 is final.
There is more to this system, it is very complex, and we will explain it in more detail when the Whitepaper is released.
Q5: In accordance with the principles of transparency, on the chain and in the blockchain-based code infrastructure, can users control their fund investments upon request?
MM: Yes, users will be able to move their funds around, but there are some limitations. Right now, we have it set to where funds are locked for 30 days before they can be moved again. There is also a restriction in place that won’t let users take money out of a coverage pool if all of the coverage has already been sold to policy holders.
For example, if there is $1,000,000 in Uniswap’s coverage pool put there by the stakers, and $1,000,000 worth of policies for Uniswap coverage have already been sold, then nobody can withdraw their funds from this pool until more users stake Uniswap and create room.
These kinds of limitations are required for the system to work properly. Without them, the system would not be reliable.
Get in Touch with Bridge Team & Community
If interested, you can follow Bridge Mutual’s developments & announcements, or even be actively involved in the community, by following or joining the channels listed below:
🔹 Website: www.bridgemutual.io
🔹 Medium: https://medium.com/@bridgemutual
🔹 TG Community: https://t.me/bridge_mutual
🔹 TG Announcements Channel: https://t.me/bridgemutual
🔹 Twitter: https://twitter.com/Bridge_Mutual